How I Hire Good Employees

Hey, today I want to tell you how our experience at Insight Tax and at GSL before I sold it affected our profitability in the way we hired a team. Um, so I'll get into that. I, I wanted to first start off with this philosophy that I was thinking about as I was kind of reminiscing over some of the stories I'm going to share with you. You know this thing where people say, hey, it's just business, don't take it personal? I've always been the opposite of that. Hey, it's business, take it personal. And so when I think about my team and like a client getting a bad experience, I personalize that and feel like I am the one who gave them a bad experience. Which in most cases has allowed me to at least make it right in the eyes of the client, whether they decide to cancel services or not. Um, I feel like I, for the most part, am able to be fair with them to their own definition of being fair. So with that being said, that is kind of the philosophy I have as I'm going to go over some of these thoughts and stories. I think my business is better because I take things personal, and I can talk to my business psychologist about how healthy that is or not, or what I need to improve there. But, um, for me, everything's personal. If our firm lets down a client, I personally feel like I let that person down. Um, okay, so with that being said, I want to talk to you about some of the hires that we've had at Insight Tax and how this relates to not only the profitability of our business, but also some examples of how this is going to relate to the profitability of your gym, um, or business. So we hired a guy— this was years ago, um— and he came in, and based on where we felt like, felt like he was skill-wise, we over— I felt like we overpaid him, um, but he asked for it. He countered. We gave him an offer. He countered, and out of desperation on our part, because we needed a body, we needed someone who could help with leads and things, we went ahead and basically negotiated something in between what I initially offered and what he countered at. And, you know, we went forward from there, and this team member worked with us for quite a few years. And in the beginning, When this person didn't have a high workload— so in the accounting space, workload is number of clients, number of clients they're managing, and then the number of new clients they're taking on— when their workload was relatively light, they did a good job. This person kept good notes, they were prompt in responding to the clients, all the good stuff that we want out of our team members. But then the team member wanted even more money. And so in my world, value exchange is really important. In fact, value exchange is one of our core values. If you want higher compensation, you need to take on more responsibility and provide more value to the company. That's just simple. Your business— no business can survive if you don't have that type of relationship between compensation to team members and value coming back for the business. So we worked it out. And as part of that, then we gave him more responsibility. And so as his workload continued to increase, the quality of his service started to decrease. And he kind of reached basically his, his capacity of how many clients he could handle, how many clients he can take, new clients he could take on. and the quality of work that he was offering. And this particular team member, I, I could only speculate, but there was something going on in his personal life. So the only thing that I will tell you is that we as a company caught him in a lie. And that is really not good for the culture that we want. One, I would want team members to be honest with us. We weren't We don't expect— like in this case, I wouldn't have expected him to divulge whatever personal issue was going on in his life. But as his employer and person providing for his livelihood, I would have expected at least some sort of honesty from him that there is something going on and this is what's going on and this is why he's taking time off and this is why, you know, whatever those reasons are. You can provide enough detail to your team member without having to divulge things that you don't feel like is their business, because part of it is their business. Instead, he just flat out lied and he ended up getting caught in it, which looking back, it looks like he kind of was lying to us for quite a few years, actually. So we let this person go. They weren't a cultural match. The quality of work had suffered. And this is where profitability comes in. The client's experience with our firm suffered because of it. We lost clients during that time period because of bad work that was done for them. And then, you know, the consequence of doing bad work is now that you're— when that happens, at least in the accounting firm industry, Your clients now are looking for things as to how you made a mistake, and they forget all the tax savings that we offer them. It's still— they're saving way more in taxes than what they're paying us, but all they're focused on is the lack of service or lack of communication they feel like they're getting. And that's human behavior. I'm not faulting them for looking at that. Would I love grace for them to acknowledge that, you know what, it's still a good return on my investment and I can be patient because I believe You know that the company is trying to grow. That would be awesome, but that doesn't always work. I'm sure you're thinking through some examples in your own gym where maybe you've had coaches that you've hired that really weren't a great fit, and therefore your members' experience suffered. Or maybe you did, um, you did one of those, uh, bait and switch type of things that was kind of big in the marketing aspect to get new leads in. If you made the mistake of doing that, I know I've spoken to a lot of gym owners where, you know, your quality clients that existed before that now had a bad experience because you basically brought in crap clients who ruined their experience when they were working out. These are all examples of the way we handle team and the way we approach, like culturally approach, what we're trying to build with. Our members and paying clients. So once we let go of that guy, our next hire looked super awesome, super stable, lots of experience, uh, and things went well until tax season started with this person. And what we ended up finding out is that this particular team member had some mental health challenges. And look, I'm grateful that we were able to give this team member space to work through that, take the time that they needed to figure stuff out. I think if we have any team members who are suffering from things when it comes to mental health, that the only thing we can do is be supportive, because some of you may be— I'm not a mental health expert, and so I don't want to try to give them advice. The only thing that I can give them, not being an expert, without— with the desire to not say something that might screw them up, um, is to just give them space so that they can find the proper resources. But from a business standpoint, after giving this person enough space, they were able to determine that they just don't have the capacity, the ability to even be in the accounting industry. So they ended up finding a job outside of the accounting industry, just working for a public or a private company. Now, the challenge for us as a business is that those— the one person who left, who was caught in a lie, who we had— well, we agreed to part terms because he knew that that was going to be a hard road to come back from. The clients that he was working with were assigned to this new person who then only lasted 9 months with our company and then again, due to mental health issues, just determined this is not the right industry for them. So now we have a client who we care about and believe in their success and desire for them to be successful, went from one accountant to another. And now we have— when that happened, we hired another person who's still with our company today, and she's awesome. But at this point, as a company, we're now the boy who cried wolf. You know, this is for those specific clients. This is the 3rd person that they've had in basically a 2-year period. And that's hard to— I get it. A lot of those clients aren't very happy. They feel like, you know, like maybe Insight Tax is going downhill. And I can see that from their experience because of the assignment of team members that have been working on them. Um, so we've had a lot of learning lessons and I'm going to share those with you, specifically what we've done when it comes to hiring and why we're so solid with Christie. Um, because she's freaking amazing. Uh, so let's, let's talk about that a little bit. Um, what we've done when we hired the first person I spoke about, and then the second person I spoke about, our hiring process, process looked a lot different than what it does now. After those 2 experiences happened, we realized we have to do something differently. For example, it always has been desperation hires. Now, as a gym owner, we kind of made similar mistakes. It was always desperation hires in the extent— in the sense that we know we needed something. And so desperation and convenience is what I should say. A lot of people we hired at the gym ended up being a matter of convenience, and we convinced ourselves that we were making good decisions and good things like that. So when I bought into the gym, um, we had a specific coach who was very much Jekyll and Mr. Hyde. Uh, there it was, it was bad. Some days this person would come in and they, they would be super pleasant, and other days they'd come in and you could just tell by their demeanor that, um, it's not going to be a good day. You're not going to get a lot of instruction. Because they're sulking about something. That was really, it was really hard to deal with. And thinking back, if I were to have interviewed during the process and this person came across our plate, I could easily see why this person was hired. They had an Olympic lifting certificate. They might have had their L2. They had some Olympic There were some other things in there. I can't remember all of them, but this person had a lot of certificates and, you know, spoke well based on their full-time job that they had. They, they communicated well in that regard that I would have totally hired them. But the hiring process wouldn't have— in that case, it wasn't figuring out how do we filter people, because look, I don't know how everyone else's culture is, but in my— the one that we tried to create, we didn't really want a culture where coaches would swear at members in a derogatory manner, which happened a handful of times with this person. And what's shocking to me is that the first time it happened, we didn't fire them. That's crazy to me, but we made that mistake and we kept this person on. So when we ended up letting that person go, um, the culture immediately improved and it just— there was more joy in the gym because of it. Yeah, we lost some members that we weren't expecting. Well, that's because we chose not to share the bad side of this person to those people because they know who it is. You guys don't likely know who I'm talking about. But those members who left did, and they were friends with this person, and that person obviously wanted to share a story with them that put them in the best light possible. They ignored the negative things. They ignored the fact that they were on a probationary period, lots of things. They ignored the fact that they were trying to get other coaches fired. Ironically enough, these— that person who we've fired works with another coach. who used to be at our gym, and they're working together and seem to be friends. I bet he's, he's not telling her that he tried to get her fired multiple times. You can't— like, there are— I'm going to show you the way that we have— we've changed our hiring process so that we can do our best to eliminate the possibility that someone like that ends up getting hired by us. I could share other examples about our gym. We had another person who on many levels is kind of a local celebrity. People love this person. This person has crazy amounts of experience in the industry. But ultimately, at the end of the day, we couldn't agree to terms or work quality because this person would just show up. And it was so ingrained in her, teaching the motions was kind of second nature, but it wasn't a good experience for the members. And this person certainly didn't care about the members the way we would want our coaches to care about the members. And so, you know, when they left, it is what it is. And then we also made a mistake not having a job description when we hired our first GM. That's a learning lesson from a profitability standpoint. Have a job description. So that your team knows what is expected of them. Because without that expectation, they will be doing things that you don't want them to do, and they're not going to do the things you want them to do just because they haven't been given enough direction. And we made that mistake with the first GM that we hired. She was great. I think she was looking for more of a secretary role to kind of help us as owners. And we were like, yeah, be the GM. And bless her heart, she tried her hardest. And I think she had a life-changing event that was a logical out for her to say, yeah, you know what, I'm not going to come back as the GM. So we made that mistake. Always have a job description because it does affect your profitability. So with all those examples being shared, let me share with you what we did in January. I was on a call with one of my mentors, and I mentioned again how as a firm we were struggling because we have We just can't find good talent, um, the talent that I feel like we want, our— that our clients deserve out of us. And she finally said, John, we've been working together now for more than a year. You just need to figure this out, like get it done. And, um, she was right. I had been complaining about it and talking about it for a year with her. And, you know, that was the kind of kick in the butt that I needed as far as like, look, if you're really going to change this, then actually change this. So as a company, we spent the first quarter of this year really honing in and researching and implementing things and trying a few things out when it comes to our hiring process. Is it perfect? Probably not. There might be some things that we can tweak, but it has resulted in us, I would say, on an 80%+ success rate of people we've hired since implementing this. And to give you context, we have hired probably about 10 people this year. Now I'm going to share this with you, and I want to first say, you may think as a gym owner that what I'm sharing with you might seem overkill in hiring a coach or hiring a customer service person, or if you call them Joy Girls or Joy Boys, that type of responsibility. I promise you, this is not overkill. Even in our current environment where there is a high number of job openings and it seems like not a lot of job seekers, I still promise that having this type of system, even though it causes friction and requires that someone who's really interested in the job make their way all the way through the steps, It has been a game changer for us. So the first thing that we do is in our job posting, we include the job description so that they know what they're actually applying for. I know it seems crazy, but having made the mistake with our first GM, it is a big deal. So we include that, but in the job description, we have what I would call an application filter. So we ask people If they're applying for the job to do a couple things. We want them to send us a video no more than— I think right now we're saying no more than 2 minutes long— and just tell us why you're perfect for the position. And then we ask them to email us with the subject line IRS sucks, like my shirt says, IRS sucks, and attach your resume. That alone Filters out a massive amount of people. I, in in my business, especially with accounting, I can't hire someone who is so lack of attention detail or lazy that they can't do those two things that we're asking in the first interview. Now there might be something like that with coaching, built as far as like an application filter. It could be as simple as. Email me a video of 2 minutes or less of why you're a great coach. Because for us too, it's a matter of technology. We're very forward-thinking. We love technology in our firm. And with a gym, you're probably going to ask your coaches— you should be asking your coaches to do some types of social media posts, or at least gathering content while they're coaching. How hard is it for them to take a picture of a gym member And then post that picture on Facebook and tag them, tag the member and say, man, Susie's crushing it today. Good job for her. We're so happy she's with us. And then of course, now because Susie's tagged, some of her friends, not all of them because Facebook filters everything, some of her friends are going to see that. That is something that your Coach should be willing to do. But if they can't send you a 2-minute video, that means they don't have— they may not have the technology know-how. I'm as simple as it sounds. So automatically filtering people that way. Once they get to that process, meaning they successfully applied, we then give them a link to fill out a suitability test. Um, we use a program called Preview. I think Preview might be overkill for gym owners, but you're going to want some other filtering test mechanism. When it comes to this process, because at this point, application, it's either yes or no moving forward. They either submitted a video and used IRS Sucks as the email, um, or they didn't. And then the next one, the way the suitability test works, if their score is not above a certain percentage, it's an automatic no. So now at this point, we have already filtered out a bunch of people in the hiring process, and as a company, we haven't had to waste any time On looking at those other people. So now, once they get past that stage, we then have a 30-minute or less Zoom meeting with them where we ask them about their resume history. We go through their resume, their last 4 to 5 relevant jobs. I mean, if they don't have that many, that's fine, but you still— everything that's listed on their resume, then you're asking these questions. What did you do? What would your supervisor say you did well? What would your supervisor say you needed to improve on? And why did you leave? The same 4 questions about the different jobs on their resume. And while, while they may— some pick up like, oh, you're asking the same 4 questions. What they're not picking up on is the pattern that they reveal to you in their answers. And really what, what I found is the pattern is really helpful for us to identify bad players. So one guy, he might be saying the reason he left is because he was never getting paid enough money. And every single time he says that, well, guess what? If the last 3 jobs he left was because he's not being paid enough money, he's going to leave your job because he feels like he's not being paid enough money. Some people just have a weird idea of what they think they're owed, this entitlement mentality. Others might leave because they— the supervisor was always mean to them. Look, I get that supervisors could be mean to team members, but if it's a pattern, it's not the supervisor, because that's a different supervisor in every situation on the resume. So you can identify patterns that way. And then that again, If we don't feel like we're wowed by the person, we pass on them. After that, we then bring them back, usually when possible, for a face-to-face in-person meeting. But if they work remotely, because we hire remotely, which wouldn't be the case in your gym because you would need them physically there, usually if you're providing training inside of a physical location, we do a key competency interview. This is based on the con— the book called Topgrading. Um, I'll be honest, Topgrading is a bit of a read in my opinion, and this is coming from someone who reads tax code. Um, but the concept of the Topgrading system is awesome. A lot of this stuff is based on that because you're trying to eliminate as much personal judgment as possible. and have actual metrics and things in which you can evaluate a candidate. So in the key competency interview, you're going to identify anywhere from 20 to 30 key competencies that you feel like that position needs. For example, integrity is a key competency, or social awareness, emotional intelligence, drive, tenacity. Those, those are examples of key competencies, and then you come up with questions that allow you to do your best to grade the person based on that competency. We have decided it is always good to have— we have, we have at least 2 team members in every key competency interview, and 3 when it's a really important position. Because then what happens is each of our team, all of our insiders, What we're doing is we're grading the person on a 1 to 5 scale. So if tenacity is the key competency, we might ask, tell us about a time where you had set a goal and it became really challenging, it took you a long time. And we wanted to hear their story to see if they have an example of that and how they share the example. And based on their response, all of us individually grade that person, 5 being the best, 1 being the worst. And then what we've done is we knew going in this person needs to score X amount in key competency total, and so then we evaluate our own answers. And then if they pass that part, we bring them back for some team interaction to make sure they really are a cultural fit for what we do. Is that overkill? No, it's not. And I can tell you, with the accounting industry, We've already experienced inflation. I have new people coming out of college right now that are making more money. They're basically about $15,000 higher in starting salary than what it was when I graduated from college not too long ago, despite the gray hair. And that's a much faster increase than the normal inflation rate. So It— I only give that example because a lot of accountants would say I'm crazy for putting this many, these many filters in finding an accountant to hire. I should just be happy if someone was willing to hire. I know how much it costs my company. So if I go back to the example of the 3 team members that I've shared with you, the 2 that end up— they're no longer with us. So not only did their service result in losing clients directly from their service. Now I'm talking about, uh, about 200 clients who went from the first person to the second person and are now with Christie, half of which are gym owners that are at risk because they've received a terrible experience. Like, in their mind, like, why are you— why are you still switching accountants on me? And the other guys weren't doing well. And guess what? We just did a price increase. So not only are they probably thinking, I got a terrible experience, now you're going to raise prices on me? Man, John, you guys are going downhill. We're at risk of losing those clients. That's revenue. And I don't want to lose those clients, but we learn from our mistakes and we move on and we try to be better and hope that people, especially business owners, extend us grace because I know that they would want grace extended to them as far as patience and believing that it can turn around. It's not always going to happen. So I know this was a lot longer of a video than I normally do, but it felt important to me. And I'm passionate about this because I believe in my team. I believe in what we're doing at Insight Tax, and I sincerely take it personal when we have failed a client, which we have done a lot. And part of that is when you're the largest accounting firm for gym owners, we just have a lot of clients. And so the number is larger. As a percentage, I think it's an acceptable percentage from the way other accountants would evaluate it. But in my mind, losing a client because we did a bad service is never an acceptable thing. I can accept Losing someone because they don't want to pay our fees anymore, that's fine. People, we all have different values on budget and return on investment. But man, if we lose a client because we didn't deliver on doing a good job tax-wise or accounting-wise or cash flow-wise, that hurts me. And we work hard to fix those mistakes when they come up and we continue to improve. Uh, even though in these cases, like we're talking about these 100+ gym owners, they don't feel that, they don't see that. And I, I respect that because that's been their experience. So think about this in context of your gym. You know, you hire one coach who provides a bad experience, um, that carries forward. And that bad experience, maybe they deliver a great, like, in-class experience, but behind the scenes they're basically poison between you and your members. and they're, you know, putting wedges there and, um, questioning the way you run your business. Man, it's so easy for some of these coaches to do that because they have no risk, you know. Um, hire the right way. So if, if you haven't— and I would say this too— if you have any coaches right now that you know, um, are a problem, I would say bite the bullet take those classes back yourself in the short run and get rid of them. The sooner the better, because it is affecting your profitability. And it doesn't always show up the way you think it shows up, but retention is a big thing, a big thing for profitability. So those are my thoughts today on how hiring and your team can affect your cash flow. And I certainly, especially in this case, I hate Firing people. I hate having conversations about how team members need to step up in the areas that they're messing up on. I just—it's hard for me, but it's super important. So, with that in mind, I'll leave you with my saying: Profit is a choice. Have the courage and wisdom, courage necessary, courage and wisdom to choose it. Thanks, everyone.