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The Entrepreneur Next Door
Managing the Gap
ACCORD MANAGEMENT SYSTEMS, INC.(800) 466-0105 (805) 230-2100
www.AccordSyst.comwww.TheEntrepreneurNextDoor.com
www.EmployeeCompliance.com
Bill Wagner, CSP
• Surveyed the personality, emotional intelligence and brain dominance of 1,509 successful entrepreneurs
• Average age: 31 years old
• Average net worth: $3.4 million
• Age when started 1st business: 24 years
• Heightened level of self-awareness
• Able to manage the GAP
GAP
Climbing the Performance
Pyramid
What are the qualities of an Ideal Franchisee?
Assessments
Define the Position
• Create behavioral performance benchmarks for all positions
• Who do I need to be to be successful
Bottom line_
People perform at higher levels:
Increased self-awareness, improved morale and retention, enhanced productivity….
. . . profits surge.
©2003 The McQuaig Institute of Executive Development, Ltd.
® Registered Trade Mark of the McQuaig Institute of Executive Development Ltd., Toronto, Canada
Assess the Incumbent
• Measure the behavioral attributes of the incumbent
• What are my strengths?
• What are my Developmental Considerations?
Gap Analysis
• Measure the difference between who I am and the requirements of the position.
• Determine the actions that support these required changes/ behaviors
• Predict the energy requirements or frustrations that are incumbent on making these changes.
PROBLEM STATEMENT
Franchisors typically have the best of several worlds… ideas, technology and
capital.
The missing link has been capital of the human kind.
The franchise community is quickly catching up to the mainstream corporate
environment by embracing the tools necessary to create a sustainable,
competitive advantage.
Getting the People Side of Business Right has become the mission critical
imperative.
If you can’t measure it…You can’t manage it.
5 P’sAside form the 4 P’s
(product, price, promotion, placement), it’s imperative
that franchisors understand the most
important P. . .
PEOPLE.
Q: Why don’t all franchisees perform at the
same level?
They’ve made identical investments.They’ve received identical training.They have similar locations, build
outs and cash reserves.
A: They are not the same people.
EXHIBIT I Sales Performance According to Age Measurement period after hiring
Performance Quartile
1st 2nd 3rd 4th
6 months Over 40 9% 38% 32% 7% Under 40 10% 39% 30% 6%14 months Over 40 7% 26% 25% 5% Under 40 8% 25% 24% 4%Note: Sample sizes-after 6 months, 1,679 in over-40 group and 3,928 in under-40 group; after 14 months, 1,058 in over-40 group and 2,397 in under-40 group.
EXHIBIT II Sales Performance According to Sex Measurement period after hiring
Performance Quartile
1st 2nd 3rd 4th
6 months Women 11% 36% 35% 5% Men 9% 38% 32% 7%14 months Women 8% 28% 21% 4% Men 9% 26% 14% 7%Note: Sample sizes-after 6 months, 1,069 women and 4,227 men; after 14 months, 652 women and 2,494 men.
EXHIBIT III Sales Performance According to Race Measurement period after hiring
Performance Quartile
1st 2nd 3rd 4th
6 months People of Color 8% 39% 30% 11% Caucasians 9% 37% 21% 10%14 months People of Color 6% 25% 24% 7% Caucasians 7% 24% 26% 6%Note: Sample sizes-after 6 months, 271 african americans and 2,014 caucasians; after 14 months, 168 african americans and 1,269 caucasians.
EXHIBIT IV Sales Performance According to Experience Measurement period after hiring
Performance Quartile
1st 2nd 3rd 4th
6 months Inexperienced 10% 33% 36% 6% Experienced 11% 37% 33% 5%14 months Inexperienced 9% 25% 20% 5% Experienced 10% 27% 18% 5%Note: Sample sizes-after 6 months, 3,721 inexperienced and 6.934 experienced; after 14 months, 2,195 inexperienced and 4,161 experienced.
EXHIBIT V Sales Performance According to Education Measurement period after hiring
Performance Quartile
1st 2nd 3rd 4th
6 months High School diploma or less 7% 38% 31% 8% College diploma or more 8% 38% 30% 9%14 months High School diploma or less 10% 23% 22% 5% College diploma or more 11% 24% 21% 6%Note: Sample sizes-after 6 months, 2,694 w/ high school diploma or less & 7,348 w/ college degree or more; after 14 months, 1,616 w/ high school diploma or less & 4,556 w/ college degree or more.
Source: Greenberg, Herbert M. and Jeanne, “Job Matching for Better Sales Performance”, Harvard Business Review, September-October 1980
JOB MATCHING = BETTER SALES PERFORMANCE
A benchmark study published in the Harvard Business Review, dispelled the myth that factors such as age, race, education, gender, or prior experience were critical factors in job success. Use of assessments to match the behavioral characteristics of an individual to the behavioral characteristics of the job correlates with better performance, higher productivity and lower turnover.
Job matching based on behavior, personality, temperament and attitude is the deciding factor. When hiring or promoting, ask yourself: “Does the candidate have a reasonable behavioral match to the expectations of the job? If so, successful performance can be predicted and maintained over time.”
This study supports the premise that job matching is the critical factor in lowering turnover and increasing productivity, not age, race,education, gender or experience.
AMOUNT OF TIME PERFORMANCE QUIT OR AFTER HIRING QUARTILE FIRED
1st 2nd 3rd 4th
6-month/job fit 11% 26% 23% 14% 24% 6-month/not job fit 2% 10% 18% 24% 48% 14-month/job fit 19% 42% 7% 4% 28% 14-month/not job fit 1% 6% 14% 22% 57%
Use of behavioral assessments for job matching in your hiring process reduces turnover by as much as 50%.
According to the same Harvard Business Review Study, 61% of employees hired with the right personality became top performers (top 2 quartiles) within 14 months on the job. Only 7% of those without the right personality became top performers. Conclusion: Having the right personality makes success more predictable.
According to The Kauffman Foundation, a study on nascent entrepreneurs found the following:
• About 6.2 in every 100 adults 18 years and older are engaged in starting a new business. That means that right now, there are about 10.2 million adults attempting to start a new business.
• Men are twice as likely to start a new business as a woman.
• All ages with the exception of those older than 65 years of age are involved with the entrepreneurial process.
• Among the most active are young men ages 25 to 34.
• Blacks are about 50% more likely to engage in start up activities that whites.
• Hispanic men are slightly more likely to do a start up when compared to white men.
• Hispanic women and white women are about equally as likely to attempt a start up but less likely than black women.
• Approximately 26 of every 100 black men, 20 of every 100 Hispanic men and only 10 of every 100 white men with a graduate education are interested in going into business for themselves.
Obviously, entrepreneurship is pervasive regardless of color, education or background.
APPROACH
• Research indicates a direct relationship between personality, franchisee and employee engagement and the of generation of revenue therefore the generation of greater royalties.
• Positive generation of revenues is heightened when similar selection principles are extended to the selection of all employees.
Identify the variables that promote/hinder
franchisee selection and ultimately… success
TOOLS
• Personality Testing• Franchisee Testing• EQ Testing• Street Smart Testing• Franchise Engagement
Surveys• 360° Leadership Surveys• Compliance Hotlines
FINDINGS
• Franchisees with the right personalities reach desired performance levels 33% sooner than those without the right personalities
• Each franchise brand may require a different personality for their ideal candidate
Three case studies
PROBLEM STATEMENT:
Franchisees were dis-engaged
Revenues were down
The Brand had changed focus
Case Study # 1
Core Values, Communication & Sr. Management 2001-2004
0
10
20
30
40
50
60
70
80
90
100
2001200220032004
2001 19 32 25 17 11 21 22 29 24 17
2002 70 68 79 78 73 75 76 90 66 71
2003 92 93 89 84 82 85 85 94 87 89
2004 92 94 91 86 83 85 85 95 86 90
I trust CarvelI believe Carvel
acts with integrity &
I enjoy my relationship with Carvel
Carvel solicits input from its Franchisees
Carvel considers
Franchisee's
Carvel keeps Franchisees well informed
Senior Management is
responsive
Senior Management is
friendly/
Senior Management is knowledgeable
I am satisfied with the
direction of the
ACTION PLANS:
• Hired 40 + people to support existing skeleton staff of 6
• Doubled the size of the franchise sales department
• Opened “Carvel College of Ice Cream Knowledge” Training Center for new franchisees
• Invested in proprietary systems for management of franchise system and franchise sales process
• Added 24 hour toll free hotline
• Tripled the number of field visits
• Added Design & Construction, PR, local marketing support
Disengaged employees:• Are less productive• Produce poorer quality products and services• Have more accidents• Generate more customer complaints• Miss more days of work• Cause us to lose clients and eventually $$$
If you can’t measure it…you can’t manage it.
Safe Working Conditions, Good Team, Competent Supervisor (setting goals, coaching, feedback, recognition, etc.), Tools & Equipment, Basic Skills Training, Feel Valued and Respected, Fair Treatment,
Enjoy the Work
Learning and Performance Development, Encouragement, Sense of Belonging, Cooperation Between Teams,
Personal Growth and Fulfillment, Adequate Pay and Benefits, Open Communication Channels, Pride in
Company and Products and Services
Customer Focus, Organizational Growth &
Success, Belief in Competitive Strategy, Product and Service Improvement, Value Diversity, Confidence in Sr. Leadership
Engaged Franchisees are 10 to 12 times more profitable than are their disengaged brethren.
Basic
Intermediate
Advanced
Master Franchisee Case Study:
Quick Lube market
Case Study # 2
PROBLEM STATEMENT:
Sales were flat and stagnant
Employee turnover was unacceptably high
Accidents and customer service errors were driving customers away
Low morale was effecting their few good employees
Management was experiencing difficulty staffing and managing their 14 locations
Franchisee Case Study
$30.00
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onths
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Ave
rage
Tic
ket S
ize
Master Franchisee Case Study
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20%
30%
40%
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reat
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ACTION PLAN:• Replaced managers and employees
based on performance. Replacements were hired more on personality than on skills (18 months)
• Trained the right employees with the right concepts (deceased accidents and errors)
• Improved retention• Decreased turnover• Transitioned from operations-driven to
sales and service driven• Increased production to 1000 tickets/day• Increased ticket revenue by $6 per ticket• Generated additional $2,190,000 in
annual revenues without increasing fixed cost
• Franchisor received additional $100,000+ in annual royalties
Cost of 2 year implementation $20,000
©2003 The McQuaig Institute of Executive Development, Ltd.
® Registered Trade Mark of the McQuaig Institute of Executive Development Ltd., Toronto, Canada
COMPETITIVE
ACCEPTING
¡ Goal Oriented
¡ Likes taking risks
¡ Seeks Challenge
and Recognition
¡ Self confident
¡ Accommodating
¡ Team Player
¡ Avoids friction with others
DOMINANT SOCIABLE
ANALYTICAL
¡ People-Oriented
¡ Empathetic
¡ Relationship Builder
¡ warm, friendly
¡ Fact-Oriented
¡ Objective and Analytical
¡ Leans more towards
logic than emotions
¡ matter of fact, strictly
business
¡ tending to be terse or sparse
SOCIABLE
(style of communication)
RELAXED
DRIVING
¡ Easy going
¡ Patient and Steady
¡ Calm, even-paced
¡ Restless and Impatient
¡ High Sense of Urgency
¡ Likes Change
¡ Intense, driving
RELAXED
©2003 The McQuaig Institute of Executive Development, Ltd.® Registered Trade Mark of the McQuaig Institute of Executive Development Ltd., Toronto, Canada
CONSCIENTIOUS
INDEPENDENT
¡ Detailed-oriented & thorough
¡ Organized
¡ Systems-oriented
¡ By the Book
¡ Persistent and Determined
¡ Likes freedom of action
¡ Dislikes working within a
restrictive structure
¡ Independent
¡ Strong Willed
COMPLIANT
42 B A L A N C E
Humble Analytical Driving Strong Minded
Aggressive Extremely Persuasive Extremely Slow By The Book
Assertive Very Extroverted Unhurried Detail Oriented
Self-Starter Warm Calm and Patient Accurate
10
20
30
50
60
70
DOMINANCE SOCIALIBILITY RELAXATION COMPLIANCE
STYL
E O
F C
OM
MU
NIC
ATI
ON
WO
RK
PAC
E
(The Generalist) (The Specialist)
Accommodating Reserved Impatient Casual
Very Accepting Critical Intense Non-conforming
ACCEPTING ANALYTICAL DRIVING INDEPENDENT
Generalist PersonalitiesTrailblazers Go-getters Managers Motivators
Specialist PersonalitiesAuthorities Collaborators Diplomats
DISTRIBUTION OF WS PROFILE TYPES YPO ENTREPRENEURS
Trailblazer18%
Motivator14%
Manager8%
Diplomat6%
Transition2%
Collaborator0%Authority
2%
Go-Getters50%
TOP 10 Franchisee/ Entrepreneurial Qualities
1. Patience2. Trust
3. Influence
4. Self-awareness
5. Strategic Vision
6. Accountability
7. Education8. Peer-to-Peer Learning
& Professional Coaching
9. Innovative vs. Creative
10. That Personality Stuff
CAPI
Authority Power
Influence
Dominance Dominance
Sociability
Authority: the legal right to make a decision to say yes or no
Power: the capability of granting or withholding rewards
Influence: the ability to convince others to do something without having to use power or authority. It is having a special knowledge to implement a specific task.
CAPI: the coalescence of authority, power and influence
Note: It is much easier reaching CAPI in younger more entrepreneurial companies because self interest in more aligned with company interest. It can become more difficult creating CAPI when self interest is different from company interest.
Franchise Case Study
Case Study # 3
PROBLEM STATEMENT:
Pareto’s law was in full effect
80% of results were coming from 20% of the franchisees
80% of problems were coming from 80% of the franchisees
Maintaining growth was becoming a challenge due to poor performing locations.
Action Items:
Surveyed the personalities of all Franchisees
Segmented personalities based on performance
Conducted a full scale Franchisee Engagement Survey
Created a behavioral benchmark of desired traits for future selection of franchisees
Trained existing franchisees utilizing the 5 Tier Performance Pyramid.
Ideal Executive
Group 1
Optimum Franchisee
Group 2Groups 3 & 4
Groups 5 & 6
Good Franchisee
Average Franchisee
Poor Franchisee
Engagement Survey of Leading Franchisor(Average Annual Franchisee Royalties)
$52,000 Optimum Profile
$24,000 Good Profile
$14,000 Average Profile
$6,500 Wrong Profile
Cost of 2 year implementation approximately $30,000
GAP
Climbing the Performance
Pyramid
Assessments
Define the Position
• Create behavioral performance benchmarks for all positions
• Who do I need to be to be successful
Bottom line_
People perform at higher levels:
Increased self-awareness, improved morale and retention, enhanced productivity….
. . . profits surge.
©2003 The McQuaig Institute of Executive Development, Ltd.
® Registered Trade Mark of the McQuaig Institute of Executive Development Ltd., Toronto, Canada
Assess the Incumbent
• Measure the behavioral attributes of the incumbent
• What are my strengths?
• What are my Developmental Considerations?
Gap Analysis
• Measure the difference between who I am and the requirements of the position.
• Determine the actions that support these required changes/ behaviors
• Predict the energy requirements or frustrations that are incumbent on making these changes.
Ace Hardware is in the process of awarding a $1,000,000 franchise location to a resident of the United States that has the best personality… for ACE.
Case Study # 4
ENTREPRENEURSLIVING THE DREAM!
www.liveloud.tv
Join Bill Wagner, author of The Entrepreneur Next Door,
as he interviews fast-track entrepreneurs for their tips on success.
Five STEPS To SUCCESS
Select
Train
Engage
Perform
Sustain
ACCORD MANAGEMENT SYSTEMS
But wait, there’s more!Name: ____________________________________Company: _________________________________Phone Number: _____________________________E-Mail Address: _____________________________Number of existing units: _____________________
Please check any of the items below to receive additional information:
___ Engagement SurveyAccord Management Systems, Inc, belongs to a survey consortium where we share millions of survey data points each year. We are in the process of creating high performing benchmarks to forty-five questions for the franchise community. Should you be interested in participating in this study of high performing companies then please complete this page.
___ Job SurveyShould you also like to complete a behavioral survey for the position of an Ideal Franchisee or other position please indicate below.
___ Word SurveyShould you like to take a personality test yourself please indicate that as well.
___ The Top 10 Entrepreneurial/Franchisee Qualities
NEXT STEPS & IMPLEMENTATION
Each and every one of our programs are completely customized and affordable. We coordinate your desired outcomes and always exceed the client’s
expectation by providing succinct, sustainable take home value.
PROGRAMS & OFFERINGS INCLUDE:PROGRAMS & OFFERINGS INCLUDE:
BEHAVIORAL IMPLEMENTATION & CERTIFICATION
EMPLOYEE ENGAGEMENT SURVEYS
SELF-DEVELOPMENT & ANALYSIS
EMPLOYEE COMPLIANCE HOTLINE
LEADERSHIP 360° ASSESSMENT
STRATEGIC TALENT TRIAGE
EXECUTIVE BRIEFING
ACCORD MANAGEMENT SYSTEMS, INC.Getting the People Side of Business Right
1459 Thousand Oaks Blvd. Bldg. G, Thousand Oaks, Ca 91362Phone: (805)230-2100 Fax: (805) 230-2186 [email protected]