Ep #10: Paying Other People Money

Hey, everyone. I'm Chris Plackey, and this is how to Lead for female entrepreneurs and founders. Because the best way to grow a business is to grow the person who's running it. Let's go ahead and get started.

Hello, gorgeous. And for the few men, maybe there's like, four of you who listen to this podcast. Hello, handsome. How are you today? Welcome, welcome. So today we're going to talk about paying other people money.

So if you have a business and you have employees, you're paying people money. I would hope that's step one. We need to make sure that we are actually paying the money. But what's really, really interesting and what I want to spend time today talking about is what you make it.

To pay people money.

When your business is going well, when your business isn't going well, when you are doing really well. We have all sorts of meaning that we attach to money. And, you know, I say this all the time. I think it's even the intro to the podcast, right? In order to grow the business, we have to help the human, the woman, the man. And if. If you happen to be a guy listening, we have to help you do the work of growing. And I think there's a lot of work we can all do, and I know there's a lot of work we can all do when it comes to our relationship with money. And I have had clients who love money. I have clients who hate money. I have clients who are afraid of money. I have clients who think money is, you know, you know, the root of all evil. I have clients who think money buys you freedom. Right. There's so many different ways that we think about money. And as soon as your business starts to make money, it starts to reveal all of these beliefs that you have about it. So for today, I'm going to just ask you a lot of questions and give you some fodder for reflection, because what I know for sure is there isn't a right or wrong way to think about money. But what we want to recognize is that the way we think about money does impact the results we get related to money. Okay, so there are. There are a couple key buckets when it comes to money and being an entrepreneur. There's the money that you make, there's the money that the business makes. There's the money that you pay employees. There's the money that you pay people to help your business, vendors, contractors, what have you. And then there's the money that you charge a customer or a client or whomever it is that you actually make the money from as that sort of starts the tip of this funnel, right, that goes through the business. And a couple of just general observations to start. I think it's always important to be very clear about why you started your business. And the reason I want you to always be clear about why you started your business is, first of all, your vision matters. It really is at the root of what you do. And when you do start to make a lot of money, sometimes we forget. We just get a little distracted. We get overwhelmed, maybe by the money. I've coached quite a few entrepreneurs who are sort of.

I wouldn't go as far as accidentally successful, but they become very successful financially very quickly. And conversations about money, how are you going to spend your money? Who are you going to buy? Who are you going to hire to help you with your money? Who are you going to hire to help you with your business?

Those conversations can start to feel very predominant in your business, and we can lose sight of why we started the business in the first place. Why did you start? Who do you serve? Who in the planet benefits from your business and what you do in the world? Always reconnecting, right? Like, my client is you. My. My client is the female founder. The female founder who is struggling, who wants to do better as a leader, but doesn't have the tools. And I think about you every single day. I just talked to a new client today, and she said, I just listened to your podcast and it's just like, you're in my ear. And I'm like, yes, because I love you and I think about you all the time, and I want to give you as much as I can to help you. Because what I know is if you give up, if you stop on your dream, the business that you have, the goal that you have for your business, if you give up because it gets hard, especially when it comes to managing and leading and developing a team. The world misses out on something if you give up. And I've watched so many of my clients who are very successful, and I think, gosh, if they had given up when it got hard, look at what. Look at what we wouldn't have gotten in the world without her doing that work. So I'm very connected to that purpose. And I really like to remember who I serve and why I do what I do. But what's a beautiful thing about my business model, which is true for most business models, is when you do well, I do well. It's a beautiful relationship to me. It's an easy way for me to stay focused on my goal because I know that my growth as I'm scaling my business and working with more and more women, I'm serving you. Which also means that there's benefit to the world if you apply the work that we do together and change your business.

So you have to first always be anchored in why you do what you do. Because the money will enter the picture and it will confuse things for you, especially if you haven't gotten clear about what you think about money. So then I have some other questions for you. You know, what is your relationship with your money?

Do you love your money? Do you hide from your money? Do you just tuck it away and have somebody else look at your money? Do you talk about money? Do you never talk about money? What do you make wealth mean? Do you want to be wealthy? And if so, why? Do you believe that your business is in place to help you be wealthy? Do you want to make money from your business? Why or why not? Do you know how to make money and keep money? I was talking with somebody about this the other day about a lot of us are really good at making money and some of us aren't so good at keeping it. Why is that? Do you like to keep it? Do you like to spend it? Do you like to share it? Do you lose it? Do you like to earn it? How do people earn money in your business? So in your business, how do people succeed?

And do you think about the money that comes into your business from your client or your customer or your products? Do you think about that money as your business's money or your money?

Because the business needs its own money, right? And then you earn a living because you are a principal in your business. But for a lot of entrepreneurs, the money is very tied up. So your money, the business's money, it's all the same money versus this is my money. This is the salary I earn, this is how much I pay myself, and this is how much profit I take versus this is what the business is generating, and this is how much the business needs to make. So I want you to just take a minute because I'm halfway through and we've talked all about you and your relationship with money and your thoughts about money and why you're in business and why you're not in business and who it is that you serve in your business. And the reason that this is so vital is it's foundational to all the other decisions that you're going to make related to money. How much you pay people, how much you hire people for, how Much you compensate people for work that they do above and beyond. Bonus plans, profit sharing plans, all the things that I know eventually you're going to come up against and have to think through if your business scales and grows beyond, you know, a certain figure amount. Everybody's is different. But I have clients who are at $2 million who are considering 401ks and profit sharing plans, and I have clients at $5 million and I have clients at $50 million. And they're all thinking differently about their way that they want to manage the money that their business generates, especially as it goes back into the employee.

So when you think about your. I want you to think about employees now and I want you to think about all the people that you pay.

How did you decide how to pay them or what to pay them? And are you happy with what you pay them? Does what you pay them feel good to you?

I've also asked you to think about things you do for people that cost money. So potlucks, bonuses, gift cards.

Trips that you take them on, indulgences that you, that you put into the office, right? Little things that you do there. I know that in my experience, entrepreneurs can be very generous. And so.

But what I have found is a couple of things. So oftentimes we're very generous. We give bonuses. You know, we give people money because the company has done well. And of course because we feel really connected to the business. We feel like everybody should win if the business does well, which is fine, but then something weird can kind of happen. And sometimes people who work for us start to feel a little entitled to making more money if the business does well. Because now we've created this sort of transparency like, oh, if the business does well, every employee will also make a lot more money. And so now they start to think, oh, well, the money's in there, so I should get some right now. I don't think that's necessarily bad. I like a pay for performance structure. I just think it has to be a structure. And not just you give people money when you feel like it, because that can kind of mess up your culture a little bit. But what happens is then. So we end up with sometimes some of the employees who are a little entitled. They start to think, well, if you're doing well and the company's doing well, I should do well, I should get more money, right? And so then I find that many of my clients get irritated with that because now employees are entitled. But then we have something else that I'm calling reverse entitlement. Which is you are now feeling entitled to be, to have a say over their experience of the money. And what I mean by that is, you might have thoughts like, they should be grateful for this bonus. They should be grateful for how much I pay them. They should be grateful for that potluck that I do every month. They shouldn't complain if I bring in really nice food. They shouldn't tell me the food is gross. They shouldn't tell me that there's not enough food. If I do a quarterly program where I give them some sort of reward if the business does well, they shouldn't complain that they have to do it on their off hours. They shouldn't complain that it's not enough, right? So now I'm assuming that I get to say how they should experience the money that I give them. And that is, that's the slippery road, you guys. You don't get to decide how other people are going to think about money.

As soon as you start to get into the business of thinking. I pay them so much money, they should be whatever you insert here, they should work harder. They should want to love their job. They should love working for me. They should, you know, be grateful.

As soon as you're in the business of determining how someone else should feel about the money you pay, you are. You are in trouble. Because we all have our own relationship with money. Your job when you pay someone is to think about how you feel when you pay them. And for me, I love to pay people that I love working with, right? Like, I try really hard. When my assistant sends me her weekly billing, I want to pay her as quickly as I can. I love to pay her. She's so helpful, right? I have a graphic designer. I want to pay her. My podcast producer, when she sends me her invoice, I want to pay her. I just am sometimes a little disorganized and it gets lost in my email. But I love to pay people that do great work for me. I love it. And I don't pay them thinking they better keep doing a good job. They better be grateful that I sent them this money, right? It's because I love to pay them. And so. And I remember when I used to have a team and I worked in a big company, like, I loved being able to give people raises who were. Who were such contributors. And I felt so good about. I just loved it. I don't want to ever pay people that I don't get excited to pay.

So one of the exercises you can do is you could make a list of all the employees that you have and write down how much money you pay them, and then ask yourself, how do you feel? What do you think about that amount? And how do you feel when you look at that amount for that person? What's the feeling that comes up? Are you excited?

Are you resentful?

Right. Are you paying people more money than you think that you're getting for the business? And is that even true?

I have some clients who overpay, and I'm just using that as a statement because they pay way more than other people do. And I have some clients who underpay. That comes from their mind, right? Scarcity, abundance, or. Or the overpayers are trying to keep people and trap them into a salary. So how we pay people is just really a reflection of our relationship with money. And how we reward people with money is also a reflection of our relationship with money. It has nothing to do with the people. And if you can make that distinction, that. I love to offer a potluck to my employees every month because I love creating a culture where we get together and we share a meal. If some people don't want to come and participate with the potluck, it's not a problem.

If some people don't like the way that I've set up this reward program, it's okay. I feel good about it. I love this reward program.

The last thing I want to talk about is your guilt when it comes to money. And I've had several clients bring this up over the last three, four weeks, which is interesting, because I have just as many clients who this never occurs to them. So I guess we'll talk about both sides of it. But I have several clients whose businesses are doing well, and they're making not just their salary, but they're making profit. But they feel tremendous guilt.

About making money and that they have these employees who aren't getting the same amount of money. Like, let's say you have a business that's generating $3 million in revenue. You earn a $300,000 salary, but you also made $900,000 in profit. I'm making it up. I have no idea. Right? So if you are one of these clients, you have that $900,000, and you feel guilt that you should be giving more of it away. Why?

The people who you hired, you made them an offer. You said, this is your job. This is how much I'm going to pay you. Here's the offer. Would you like this job? And if they say yes, they didn't say yay. They didn't say yes. And also, please pay me another 50 grand if you make extra. Right. So your thoughts around that and what I find so interesting, I think I've said this on a previous podcast too, right. Most of my clients are true capitalists.

They like to make money, and yet they're sort of treating their business like socialism. Everybody gets their fair share, right? I know you don't think that way, but that's what happens if you. If you tend to believe that if you are doing better, everybody else should get more. Now, that doesn't mean that if that's a philosophy that you have, that you don't build a structure, a compensation structure, that that enforces that. But you carrying around guilt because you're making money is going to injure your business. It's going to injure your relationship with your employees. And I'm confident it will drive you to make some really weird choices with what you do with your money. Now, the flip side I also see is true. I have clients who never feel like it's my money. I worked hard, I'm keeping it. Guess what? If you want to make this kind of money, go start a business.

But for now, I decided to start a business. I had built the team I hired, the people I set up, the product I delivered. I'm clear about my purpose. I'm clear about who I serve. I'm making my money, and I feel good about it. Right? That's an okay way to think.

I think we think we shouldn't think like that. Like, people who tend to feel guilty think that's what being too selfish. I don't know. I went into business, I started my own business because I wanted to make my own money. I don't have any problem paying people who work hard for me. But when I make money, it's my money. I've earned it. I feel really good about that. Right. So we all have different relationships with money. It starts with being really clear. I want you to always know why you're in business, because I just feel like that's the touchstone that we can always go back to when we're doing really well or when we're struggling to earn income and revenue. Like, just remember, what is the purpose? Why are we at this? Why does this matter if I'm making $25 million or $5 million or $500,000? Are you clear about what you're at this for? Because it always is the level set, right? Then we have to really explore what is the relationship you have with money. Do you Believe there's enough? Do you believe there's never going to be enough? Do you believe money is bad? Do you believe money is amazing? Do you believe that you should never look at your money? If you look at your money, it magically disappears. Do you believe that other people can manage your money better than you can?

How do you think about money when you make an offer to a person? We've talked about why we pay people, right? In my human capital podcast, we talked about that paying people a salary is investing back in your business because it's capital, it's wealth. But if you're on doing it on the cheap.

Why? What are you afraid of? And if you're overly abundant and you pay people above and beyond, why do you do that? And do you have symptoms of reverse entitlement where you pay people or you reward people with your money.

And you expect something in return that will never work out. You have to pay people and reward people with the money that you earn or the business's money, because it feels amazing for you whether they love it or whether they don't, right? I just had somebody who gave bonuses to everyone and bonuses taxed at a higher rate, usually 35, 40, depending what state you're in. And people were totally complaining about how high the tax was on their bonus, right? And my client's like, seriously, I just gave you a bonus? And they're like, yeah, seriously, I just got. I only got 40% of it. I only got 30% of it. Whatever the tax was, it's so and so. You know, we can be very disenchanted by that response, or we can just think, I am so happy that we work together in a business that we were able to give a bonus if you're unhappy with that result. I'm sorry to hear that, but I feel really great about paying it versus getting caught up in their response. So watch that. Because we do that with our. With ad hoc stuff and rewards that we do, but we also just do it with salary, right? Like, I pay this person this much money, they should be grateful that they got this job, right? We kind of go into that. No.

You paid them, you hired them, you made that decision. Do you like your decision? And if not, why not? And then I would make a list of all the people that work for you and write down what you pay them and ask yourself, what do I think about this and how do I feel when I think that? Right? Because I think you'll find that there are some people that you look at what you're paying them and you think, oh, that's awesome. I'm excited. Other people, you might think that's way too much. You feel resentful. Other people, you might think I'm not paying them enough.

And you feel embarrassed. Just really, just be honest with yourself. Right. So your relationship with money is important. Oh, and then lastly, there's your money and then there's the business's money. And do you keep them separate? Do you have a clean relationship between you, then your business? Even though you're involved in your business's money, the business has its own relationship with money. So we have to be clear that those two have boundaries between them. So take a little time, reflect on some of those questions. Thanks for tuning in today and I will look forward to talking with you next time.

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