We fired half our team…this is why..

What is up? Welcome to my YouTube channel. My name is Layla Hormozi. I am co-CEO of Acquisition.com, which is a portfolio of companies that does about $85 million per year in revenue. I don't do coaches, uh, coaching or courses or masterminds or any of that stuff. I just make these videos because my husband and I are trying to help the entrepreneurial community have better education on being an entrepreneur, uh, without making you pay like $50 grand. So that being said, this is part 2 of a series of videos that I've been making that are really like, if I were to create a course on how to run a company and build one and scale one and sell one, I would start here. And so these are my first 5 foundational additional videos. My hope is to create like 200 to 300 videos on how to do this, but these are the first 5. And so if you are a leader or manager, a CEO, this video is for you. And it's for people who are looking to scale and get to the next level. So like if you're at $3 million and you want to get to $10 million, or you're at $10 million, you want to get to $30 or $50, I think this video would be of value. So let me know what you think in the comments. I'm really curious. The last one got a lot of good feedback. I want to see how you think of this one, right? So like I said in my introduction, this is the part 2 to the 5, uh, I want to say episode series in this YouTube, uh, series and talking about management and high output management. And so the second piece that I want to talk about today is accountability. And I know what you're thinking, which is like, accountability is this like amorphous concept that honestly for a really long time annoyed the shit out of me when people were like, well, you have to hold people accountable and you've got to. And I was like, what does that mean? Right? And I think that a lot of the times people tell you in your business, they're like, you should be holding people accountable. Like the issue in this business is accountability. And it's like, well, what the fuck does that actually mean? And nobody's able to break that down into actual tactics. And so what I want to explain to you guys is my experience with this, as well as how to actually put this into play in your business rather than just talk about how we should be doing more of it. First, we have to define accountability, right? So this is like my first, uh, my favorite definition that I've ever had, which is accountability is really just the quality or state of being responsible to one's obligations. Okay, so holding someone accountable means holding them responsible for their actions and results. All right, seems easy enough. So how does this relate to, you know, if you're watching this and you are a CEO, or if you're watching this and you are a leader in a company, right? How does this relate to you? Well, as a person who manages people, it's going to be your job to always let your direct reports know how they're doing in relation to your expectations of how they should be doing, right? So a lot of people, I think, especially if they've not had a ton of experience in management, you know, they're like, what does management actually mean? And management is making sure that you set the expectation of what someone should be doing, and then you tell them where they're sitting in terms of of, you know, how far, how close are they to that expectation. And so it's really just your job. And if you're watching this and you're a CEO, I can tell you that for a long time I thought to myself, you know, well, I've got a COO and I've got a general manager and I've got the manager over here, and like, they're the ones that are supposed to be holding people accountable. Um, and I think that what I've seen a lot of, because I did it myself in the beginning, is like people delegate accountability. The thing that you have to understand is that you don't delegate this. You disseminate this. And so you are the sole source of accountability in your business. Like, if you don't hold people accountable and if you are not the absolute example of what accountability is, it only gets weaker from there on out. So like, the bigger your org chart, the more it gets disseminated and diluted as it goes down the org chart. So you have to be the source of this. You have to have a low tolerance for people who don't hold others accountable. In order to do that, you have to start with being the one who holds the few people that report to you accountable. Because you're teaching them by your example. A lot of the times what, you know, a team is going to do, especially if they look up to you, is they're going to think, well, what would John do in this situation? How would he act if his direct report, or if I did this? That's what they're going to use for their decision-making. I can tell you that in the beginning of our business, once I got more leaders in place, you know, I thought when they weren't holding their teams accountable that they weren't doing a good job. And it took me, you know, and it takes me a lot to admit this right now, to realize that I was not being clear enough with them. And to realize that having a conversation with somebody about accountability has to be absolutely clear and direct, otherwise they don't know you're having it. And so that being said, this did take me about 3 years to figure out. The reason I wanna share this with everyone here is because I think that it's honestly one of the hardest things for people to do, and it's the one thing that's missing in most organizations. You can have all of the hard stuff, you can have all the systems, you can have all the best talent, if you don't have accountability, nothing gets done. And so that's why I like to say instead of CEO, and I like to have lots of these acronyms, it's really Chief Accountability Officer. Like you are the top of the food chain in terms of who holds people accountable. And so it has to start with you. And that being said, I wanna share some of like the symptoms that I've experienced personally when there is low accountability on the team. And this means I personally wasn't holding leaders accountable enough and I had leaders on my teams that weren't holding people accountable enough. So if you're looking at the hard science sides of business, What does that look like? The first one is having low revenue per headcount. And so when we look at portfolio businesses that we're going to take on, one of the metrics that I ask them to measure, or I just do the math myself because it's not too difficult, is how many people are on the team and then how much revenue is generated per person. And what you see a lot of the times is in first-time business owners and people who are just getting started is they have really low revenue per headcount. And the reason for that is there's no efficiency because there's no accountability, because nobody is actually pushed. And instead, they are the ones who dictate their schedules and what they do and how much they can get done.. And I think if you know anything about psychology, you know, people do better having outside measurements and having others measure their progress. And so that is one of the first symptoms that you experience, which means, you know, your profit margins obviously are going down. The second piece of that is hidden expenses. This is something that I think in the beginning of our business was rampant. It was like I would look at the expense sheet and I was like, we're a virtual business and we don't have any overhead. Like there's no building. Why is it so expensive? And the reason it was so expensive is because we didn't have checks and balances in place and we weren't holding people accountable to our expense policies. So you can like write a piece of paper, but if you don't actually check every month and review the things that people are spending money on and set the expectation for that is actually not acceptable at all, and you actually will get fired if you spend money on something like this, then that's what happens. You know, I think at the beginning I can remember time where we had a company event and, um, a group of, you know, teammates went out to the bar and spent like $1,000 at the bar, and I was livid. It took me a minute to realize this was my fault because I didn't set the expectation and didn't hold them accountable. I just let them do what they wanted. And I'm sure if you're watching this, you might have experiences or you know somebody who has where, you know, that's what their team does because there is no accountability. And then the last two is really, you know, low sales, upsells, cross-sells. I think that this, especially if you have low accountability on a sales team, I can tell you that I have had sales leaders in our company who did not hold people accountable and it was terrible. I mean, that is probably one of the positions that you get the worst ROI on if you have low accountability because it just, it's detrimental to the entire business.. And the job of a sales manager is literally to hold salespeople accountable. I think out of any other management position, that is the, that is the sole responsibility of the sales manager. If they do that and nothing else, then they have done their job. And so you notice that that comes out in like low sales, upsells, cross-sells. So if your sales team right now is not doing well, or they're not, uh, you know, upholding what their metrics are and everything else looks fine and dandy around, I'd be looking at that sales manager. I think they have low accountability, which probably means you are not holding them accountable, which is what I experienced myself. And then lastly is high employee churn because ironically, People don't hold others accountable because they want to please them and they feel poorly when they hold them accountable. Like, oh, I'm being mean to them. I'm being too hard on them. You know, maybe it's my fault, not theirs. And the reality is, is that there's high employee churn because they don't respect you. And so because they don't respect you or they don't respect a leader on your team, they end up leaving, which is crazy and it's ass backwards. But this is what happens. And now let's look at the behavioral side. Okay. The behavioral side of a low accountability, right, is again, ironically, Tons of complaining. When we had low accountability on our team, probably the second year in business, when I feel like there just was not enough and it was not upfront enough or blunt enough, there was tons of complaining all the time. And a lot of the complaining came from the lack of expectations and then the lack of follow-through in terms of myself and managers on the team, right? Nobody was actually holding anyone to their job and they weren't setting the tone or the expectation that we don't complain here. There was no accountability to the culture of the company. And then what is interesting is that what stems from that is you notice if a leader is not holding someone else accountable, and you guys, we all do this, typically they complain about the people that report to them. I am guilty of this myself. I have done this in the past. And actually, I know that if I'm angry at someone on my team, if I feel resentment or like I want to say something not nice about them, it's usually because I'm not doing my job of setting the right expectation and holding them accountable to the expectation. And so that's a really good way to like pull the thread and figure out what's going on.. But if you have a team that complains to you about their team, just know that that is a symptom of low accountability. And then going with that, tons of unfinished projects. You see this so much like in portfolio companies that we talk to. Oftentimes when we go in there and they're like, what do we need to be doing differently? I'm like, you need to fucking stop starting stuff. Everything has started and nobody on the team has followed through. There are like 50 open projects and nothing has actually gotten across the finish line. And so there's just tons of unfinished things. And then again, that kind of goes with having high activity but low output. Everyone's doing things, but they're not actually producing results because there's nobody dragging them across the finish line or saying like, my expectation of you is that you must cross the finish line, otherwise the job is not done. I just wanna share like personally how this manifested in my business, which is, okay, at the peak of our business, and I wanna say this was 2018, you know, we had 120 full-time employees. And I wanna say that we were doing like 4.5 or I think we did like $4.6 million that month that you see that. And we had 100 full-time employees, which like, that doesn't seem off to have that kind of revenue and that kind of employees. However, what I came to find out was that because of the low accountability, there were buckets and buckets of people who literally weren't doing anything. And I've talked about this in my other videos. I had a girl come to me and tell me, my boss has literally given me no work. I take 2 calls a day and you're paying me $20 an hour. She's like, I ethically cannot work here. And I was like, that was when I was like, blows my mind. I was like, I fucking suck. I was like, I need to do something. This is not okay. And so the crazy part is that if you were to look at the company now, you know, it's got 55 full-time employees cranking the same production that it was then. That's insane that you can have the same revenue with half the team. And the reason for that is just the standards change and the standards are the accountability. Accountability is what tells people what the standard is. And so that's why this is so important and why I'm so passionate about this subject, because I've just seen how the soft stuff like accountability can just absolutely transform business. Can you imagine the profit margins on a business that's, you know, has 120 people versus 55 people? What more can we invest in? What more can we do to improve the business with that much money that's left over? How much better is the culture? I couldn't stand the culture of my team in 2018. I was like, I'm going to blow my brains out. This sucks. And now I absolutely love the team. It's fantastic culture. It's everything I always wanted. It's because I learned these basic things and I believe that they are correct. What I've come to realize is that accountability is really what ties a commitment to a result, right? So it's like a person makes a commitment. I'm going to— they sign the job description, they sign your offer letter, they say they're going to work for you. Here's the job description. That's their commitment. They sign on the dotted line. You are the glue that ties them to the result. You are the one telling them if they are doing their job or not, right? So you're essentially the glue that brings them across the finish line. And so to kind of cement this and make this more real, I want to dissect a common scenario where accountability delivers results, one that we are all familiar with— the holiday 10 or 5 or 17 or 20, whatever you want to call it. And I use a lot of fitness stuff because I've been in fitness since I was 14. Okay, so every holiday season, right? And there's a study done, it's like most people in America gain weight. It's just what happens, right? Because people just say, fuck it, I want the cake and I don't give a shit. And you're covered in your winter clothes and so you're like, nobody's gonna see me anyways, I have time to lose weight, blah blah blah. There was a study done on people who weighed themselves and people who didn't weigh themselves during the holiday season. What do you know? People who weighed themselves daily, even throughout Thanksgiving and Christmas and New Year's, lost 1.9 pounds during the holidays. They did nothing different. They didn't go on a diet. They didn't do an exercise routine. They didn't start their New Year's thing. They literally just stepped on a scale. That's it. Every day. The other party didn't weigh themselves. So they didn't change anything either. They just didn't weigh themselves every day. They didn't step on that scale, and they gained 4.9 pounds over the holiday season. So what does that tell us? That tells us that outside measurement dictates results. People are more likely to react to a third party telling them their progress than they are to any internal cues. They might not be hungry, right? Or they might be hungry in the case of where they lose weight. But they look at the cue from the third party and say, depending on where the scale sits, I'm going to eat or not eat. Doesn't matter what I think. What I'm trying to say is that you are the scale for your team. And that is what I use to tell myself. I'm like, I am the scale. I am the one that has to tell them, are they doing well or not? And I have to check myself and think often, have I told them that they're really exceeding my expectations? I like think through, I'm like, shit, I haven't told them enough lately. Let me like, you know, send them a gift or send them a really nice message or write them a letter. Or then I'm like, you know, if I start noticing that I'm getting annoyed with somebody, I'm like, ooh, you know, are they not meeting my expectations? And then I have to say, did I set the proper expectations? Have I expressed my expectations? First, I'll make sure I've done that, right? And then second, if I already have, then I say I have to have a conversation to hold them accountable, let them know how they're doing in relation to the expectation that I have set. It's really just looking at where do they fall within the range and why? And how do you make it higher or lower? So what I like to tell people is when I'm having the conversations, I'm like, listen, if you want to continue to not meet my expectations, here's what you need to do. So here's what you should do to basically lose your job. This is all the steps you would need to take. Okay, now let's do the opposite of that. And that's one of my favorite ways to frame it because it's like a lot of people honestly respond better to this is what I should not do, right? Rather than this is what I should do. And I like to talk more in the like, here's what we want it to look like. But I have found that it just, it hits better with people when you say, don't do these activities. That's really what your job as a leader, as a CEO, as a boss is, is to tell them where do they fall within that range. And then within that range, there's really two types of accountability. Okay? Because you're probably thinking to yourself, well, there's lots of different instances in which I have to like hold people accountable or whatever. Okay? And there are, there's two. There's really tactical accountability, which is when you've got small infrequent issues, it's like a quick turnaround. There's no ingrained behavior and it's like a tactical solution versus developmental, which is a large, more frequent issue, uh, which is probably going to take a longer time to change, and it's an ingrained behavior, it's probably like a psychological or conceptual solution. Okay, so what does that actually mean? Tactical would be like, you know, your teammate misses turning in their end-of-week report, right? And so then you remind them, hey, you need to set up a calendar reminder going forward, and that's going to keep it front of mind. And so this has actually happened to me many times, which is like my all-star A players have forgotten to turn in an end-of-week report, or they've missed the deadline for it, which then I have my time set to check them during the day, and I don't get it in time, so then I have to extend and do it at a different time, right? And so Instead, I just said, hey, cool, I'm going to put a calendar reminder on for both of our calendars for you so that you see it's due at this time and that's when I'm expecting it by. Easy fix. The second kind is a little bit more tricky, which is developmental, which is usually when an employee like can't produce 10 out of 10 results because, you know, maybe they lack humility, they're outwardly aggressive, causing teammates to avoid them, creating basically dysfunction for the entire business. And we've all had those kinds of people where you're like, Maybe, and I can tell you there's instances, I've had 2 people like this where they are top performers, but they're so outwardly aggressive to teammates, like, I am right and you are all wrong. You all on this team are stupid. And they are not humble at all, which is when I bring them the feedback, they don't accept it. And so then those kinds of conversations are, hey, my expectation is that if you're a high performer, you're also a culture fit. And right now you are violating our core value of X. And if you continue to do this, I can't have you on the team. Doesn't matter how well you do, doesn't matter how high performing you are, it's toxic. Like, the team cannot congeal with you. They don't trust you if you talk to them like that. And so that's usually a harder conversation that most people tend to avoid. I think most people tend to go and say, like, I can— they can do tactical all day because it's like you can just send a little Slack and, you know, let someone know that that happened. But most people have a really hard time with the developmental. And the reason for that is this, right? It's this question, which is, why is there such a large void of this in business? Which is mostly the developmental accountability. And honestly, if you boil it all down, it's literally this, which is telling a grown-ass person that they're not meeting your expectations and that you don't like what they're doing is really uncomfortable. And we're humans and we want to avoid discomfort. That is literally it. That's why accountability is hard. It goes against our— it goes against literally our DNA. And so it's like funny because people are like, I'm just not good at holding people accountable. I'm like, shut up. I'm like, nobody's naturally good at holding people accountable. You have to train yourself out of your natural instinct. Every time in the beginning when I had to have a hard conversation with somebody, we were first starting the business and I realized that I was lacking this, I would be like up having dreams about it, sweating, my hands would be racing. I had my little Fitbit that would be like, Layla, you need to take a breath, relax, calm down. I was like, shut the fuck up, you know, because I was— my heart was racing. I was so nervous for the conversation. And it's because it's normal.. And so when people say, they're like, listen, I'm just not that good at that. You know, I let my team do that. I'm like, that's bullshit. I'm like, you're just, that's such a, like, honestly, if I were a team, I would never respect you. And that's because honestly, I, guys, the reason I say that is cuz I hold myself to that standard now because I know that if I don't do this shit, my team doesn't respect me. The times that I have, I can feel that they don't respect me. There's two times when I waited too long to honestly, one time was to fire someone and another time was to have the conversation with somebody and I could feel that my team was like, what the what the fuck is going on with Layla? And it was like, oh, I had all these things going on, I just don't have time for this conversation right now, and blah blah blah. There were so many excuses, right? And that's honestly what that kind of leads me into, which is we have all these lies that really ruminate in our head that prevent us from having these conversations with people to do our job of holding them accountable. And the reason for that, again, is because our brains are wired for survival, not for success. And if you want to be successful in business, you have to go against your natural instinct. And these are the thoughts that I've had many a times that have prevented me from holding people accountable that I now realize is just my brain trying to keep me safe, right? Which is like, I shouldn't have to babysit them. You— as if holding someone accountable and telling them how well they're doing in relation to the expectations you have set is babysitting, right? It's like completely different. Uh, they're an experienced adult, they should know better. So you see this one a lot when people hire someone with more experience and more tenure and they're like, I shouldn't have to tell them anything. They expect that they don't have to hold people accountable just because they're older and more experienced. It's absolutely wild. I used to think that all the time. Like when I hired the first couple people who were more experienced and had more tenure, I was like, oh, I don't need to do the same stuff I do with everybody else when it's absolutely not true at all. Like I talked about in the last one with expectations, they play checkers, you're Monopoly. They don't know what to do. You have to set the expectation and hold them to it. Oh, and this one's a good one, which is we're a high performance culture, they just don't fit in, right? It's like, and I've done this before, guys, I'm telling you all this because it's from my past, which is like you think like they come in and they don't perform immediately and you're like, Yeah, well, they're just not a good culture fit. It's like, no, you actually just didn't train them properly or do the work or set the expectations or hold them accountable. And now you're just going to fire them out of the blue. And then lastly, there's a lot of people say, you know, I don't have the time to manage someone to this extent. I just need to like fire them, let them go. They're just like too much of a headache. And it's like, if you're a manager, that's literally your job. That's what should take most of your time. And if you're a CEO, again, that's where you're going to want to get to at some point, is that your main job is coaching and holding the team accountable. Making sure the team is performing. I think a lot of this really stems from the fact that anger protects us from destroying our own self-image. So anytime you're angry at someone else, you have to look inside and ask yourself, what are you afraid about what the situation means about you? And I think that for, you know, a good handful of— I want to say like 18 months in the beginning of our business, I would get very frustrated with other people, and I didn't understand that it was just me and I was the problem. And I was very annoyed that I had to go fix it. You know, when I looked at the team of 120 people and I said, I fucking hate this, and I know it's inefficient, it's not the culture I want, and I don't like coming to work every day, and I don't like running these meetings, I see the people rolling their eyes and spending money how they shouldn't and not performing well, I don't know why I'm paying all these people. And I had to like look in the mirror and be like, it's fucking your fault, what are you gonna do? So I was like, Fuck it. Gotta put my hands down, like head to the dirt, fix this shit. And that's what I did. And it sucked ass. You know what I had to do? I had to fire almost an entire leadership team and tell them it's my fault I'm firing you because I'm fucking inexperienced and I didn't do what I didn't know that I should have been doing. And I can't fire myself because I own the company. So I'm firing you, right? Like, it's crazy. It sucks. But this is the real shit. I know what you're probably thinking, which is Okay, I get that this accountability stuff is important, but like, how do I actually hold someone accountable? What does it actually look like, tactically speaking? It has taken me a long time to really distill this down because, again, like I said, I feel like most people talk about accountability and it's like amorphous concept, and everyone's like, okay, accountability, yes, yell at people, or yeah, tell them when they suck. And you know, you're like, what do I actually do? I like to use this, which I made this up myself, which is the accountability formula. And I want explain it to you and then break it down piece by piece. Okay, so expectations plus measurement times feedback equals accountability. Okay, let me say that again. Expectations, you tell someone what it should look like and what you expect them to do. Measurement, you tell them quantity, quality, you give them exact numbers that are related to that expectation, right? Those together are one thing. Times feedback. Feedback is the only thing that can amplify how much accountability there is, because the more times you tell someone, the more ways you tell someone, and the more just you tell them with it, the more accountable you hold someone. So you have to have expectations and you have to have measurement, but they are not multipliers. The multiplier is feedback, and feedback is going to be the next video. But feedback is the thing that makes accountability stronger or weaker, because the more times you tell someone where they are in relation to your expectation, the more accountable you're holding them. Whereas the less that you tell someone, you like tell them one time is kind of in passing, that means you've held them accountable not much at all. And so that is how I came to this formula. So I'll break down, uh, what each of the pieces look like tactically. Okay, so expectations. What are expectations? When I think of expectations in the business, like we talked about on the last video, you'd have company mission, you'd have brand promise, core values, departmental expectations, role expectations, and then like their job description. Those are all forms of expectations and things that I would give them to read as well as I would verbally, you know, communicate to them. Now the second piece is measurement. So how is this different from an expectation? It is tied to an expectation, right? You have to have the two together. Measurement is going to be timelines you set for people, scorecards that you measure people within, utilization metrics. MBOs, KPIs, and surveys. An MBO is management by objective, which you can look up and you can figure out how to judge performance based on that. And then KPIs are just key performance indicators, which I talked about on my last video. And then surveys, to survey maybe teammates and other people around that person on how well they're doing. So they're all just forms of measuring the expectation, right? If you set an expectation, you know how— you have to know how to measure if they are meeting that expectation or not. And so you have to give it some sort of scale. So those are the scales I would use. And then lastly is there's feedback. So how are you going to tell them where they are on that scale of accountability? You know, there's low performance and there's high performance. Where do they sit? And then this is how do you deliver that information. One is you can do it on meetings. So there's different ways that you can do it on meetings, which is, you know, shouting people out for going above and beyond. I'm not saying you should tell people they suck on meetings. I'm saying that you should recognize people on meetings. Right? And so this is a way to show others how, what the expectation is. A second is one-on-ones. That is where I would use the one-on-ones as the main thing that I would use to hold someone accountable. I'd be saying, listen, I would literally use the slide that I just showed you guys that has that little measurement arrow, and I would show them where they sit in it and say, and then I would fill in with little words, here's all the things you need to do to get to high performance. It's that simple. And then using end-of-week reports. So letting them know on their end-of-week reports, they turn something into you, you say, hey, this isn't meeting my expectation, I need you to do this like this. I need to adjust this here, etc., etc. Team surveys. So serving teams to see how they think someone's doing in relation to what the expectation of the team is. Feedback exercises. So a lot of the times, actually pretty much every time for the last 3 years that we have had a company quarterly, I do some kind of feedback exercise. And so usually what I do is I, you know, do a presentation explaining how important feedback is and how it's vital to the company growth. And then I ask people and I first teach them the scripting and how to ask for feedback and how to give it, etc., etc. And then I have people do it with each other, and that's how they can figure out, am I meeting the expectations of my peers, right? And I'm not gonna play monkey in the middle, so they do it direct to each other. It's good because it's in person, so there's not like this weird animosity, because I think over Zoom or like Slack would be terrible. And then lastly, again, is recognition and reward. When people are meeting your expectations, reward them, and reward them publicly. Reward them privately and publicly. And that is what makes up accountability. So you've got expectations, plus measurement together times feedback. Because remember, feedback is the only thing that can multiply how much accountability there is, and that is what makes up accountability. Like with the last video, I would say, right, you know, rate yourself on a scale of 1 to 10 for accountability. Again, 1 is like there is literally none of this, and every symptom that you described is what I am feeling, and I feel like I hate myself now, which is fine and normal for a lot of people. Like, if you're just starting a business, that's pretty normal. And then there's 10, which is like, I am fucking crushing this, and why am I listening to this woman on YouTube, right? I hate this video. You wasted 28 minutes of my life, Layla. So I'd say rate yourself on that scale of 1 to 10. And then, like I said with the last video, start with one thing. Like, if you're not able to hold people accountable, set yourself a challenge of just this next week, have one conversation with one person. Like, if you're like, I haven't done this for anybody, start with one person. And one conversation. And then once you do that, then you can say, cool, and next week I'll do another conversation with another person. I wouldn't— like, don't take it in large chunks. Take it bit by bit, as much as you think you can handle. And then eventually, over time, you will see that you can completely change your culture with adding this in. And so I hope this was useful. Let me know, um, what you think of the video, uh, if you liked the content in it. Again, I really appreciate everyone who left comments on my last video because it was really informative to how I should continue to make these and then what you'd like to hear about. And so the next 3 videos will be the last 3 practices of high output management. And I will see you on the next one.