How To Manage Your Badass Team | Mikey Trafton, Alamo Drafthouse Cinemas | BoS USA 2018

Mikey Trafton, CTO, Alamo Drafthouse Cinemas

There are 3 reasons your team isn’t doing what you want them to do, says Mikey Trafton.

1. They don’t know what you want them to do
2. They aren’t motivated to do what you want them to do
3. They’re not capable of doing what you want them to do

In his 3rd talk at Business of Software, Mikey picked up from where he left off at the end of his previous talk ‘How To Recruit A Badass Team‘. You’ve hired a great team, but you need to learn how to manage them. Mikey is here to help you help your employees succeed with processes, tools, advice, and war stories from his experience as an entrepreneur.

Video, Slides, & Transcript below

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Slides

 

Transcript

All right thank you very much. Mark said Hey why don’t you start at the top of the stairs so that you know there’ll be more time for the intro music and I promise you everyone will just keep clapping the whole time you’re walking down those stairs… so I’m Mikey Trafton and I’m super excited to be back at Business of Software. This is my favorite conference to present at and my favorite conference to attend so I appreciate you all having me back. What I thought I would do for those who haven’t heard me speak before is I would just catch you up a little bit on my story, but it’s going to require some audience participation. OK so when you see this slide I need you to say YAY. And when you see this slide and you just say AWW. I’m counting on you OK. Don’t let me down on this.

So I started my company which is called Bluefish 20 years ago in Austin Texas. We’re a software consulting company we build custom software for Fortune 500 companies. And when I started the company we got off to an amazing start. We made $300,000 profit in our very first quarter (YAY). But I had built such an awful company culture that my entire company walked into my office one day and they all quit (AWW). So I had to go on a quest to learn how to build a great company. And I started going to conferences and reading books and I changed the way I hired people and I changed the way I manage people. And it started to work and we started to improve and eventually we actually won best place to work in Austin Texas (YAY). But then the recession hit us (AWW). And we lost 80% of our revenue in a single year (AWW). But our company culture was so freaking awesome that my entire company came and they all volunteered to take pay cuts so we wouldn’t have to lay anybody off (YAY). But the recession was just awful and we had to lay off half the people anyway (AWW). So we retooled the company. We created new offerings. We attacked new markets. We got this company growing again. We started making money again (YAY). But this new company was different and it wasn’t really a fit for me and my passions and my personal talents. So I ended up leaving the company (AWW). But I did leave my company in great hands because my team was freaking badass and they grew the company. They actually doubled revenue, they more than doubled profits and because I was still the owner I just got to sit back and cash the cheques (YAY). But that was like five years ago. A lot has changed, the market has changed. I ended up taking a job somewhere else and the company doesn’t even exist anymore (AWW). But that’s because I sold it bitches! A bigger company came in. They saw our amazing company our amazing culture our amazing team and they made a strategic acquisition. So that worked out great for me and it’s working out great for them as well. So YAY!

And so that brings us to today and the topic at hand which is managing a badass team because I could not have sold my company if they were not badasses. I didn’t even work there so clearly the acquirer didn’t care about me. They cared about my team. And when I say badass what I mean is someone who’s a super high performer and someone who also is a super great culture fit. Managing badasses is kind of tricky right because they’re not just your everyday house pet, a badass is a working dog right. They are happiest when they are out striving and achieving, so it’s tricky to manage them sometimes. And if you want to have a bad team then you have to be a badass manager because the number one reason why people leave a company is because of their direct supervisor. So how do we do this how do we manage this badass team? And you know my experience is most entrepreneurs actually hate managing people. And why is that. Most because sometimes our frickin employees just do what we want them to do. And that is for one of three reasons. Either they don’t know what we want them to do, or they’re not motivated to do what we want him to do, or maybe they’re not capable of doing what we want to do. So today I want to give you kind of a toolkit of the tools and systems and processes that I’ve used over the years to manage my bad ass team and kind of get the best out of them.

And so let’s look at each of these problems and see if we can come up with some solutions and we’ll start with the first reason why your team sometimes doesn’t do what you want them to do which is maybe they don’t know what you want them to do. And this is really our fault as managers right. Because we have to set those expectations with our employees. And the first kind of expectation that we need to set is a general expectation. And so a general expectation applies to kind of any situation. So for example if you’re the kind of person who you don’t want a lot of detail you just want the bottom line, that’s a general expectation your team needs to know about. And the way that I have handled this. And I’ll say for a moment that most managers are kind of awful at this right. That never occurs to them to set general expectations with their team. And this kind of sucks for your employees because they can’t read your mind. They don’t know what you want and they probably are thinking that you expect the same thing that their last manager expected. But everybody has different working styles and so that’s just not gonna be the case.

So the way I solved this problem is I wrote a document called ‘How To Work With Mikey’ and this document kind of explains my idiosyncrasies what I care about and what I expect from my employees. For example there’s a section in here. You know it’ll say You know I am a high fact finder. I like to do a lot of research before I make a decision. So if you’re going to try to convince me of something it’s going to take evidence and data. And there’s a section that talks about what I expect from my team and so it has a nugget in there that says for example I expect when we’re making a decision I want to hear your opinion. I want you to voice everything that you have to say. But once we make that decision as a group, I need you to stop dissenting and I need you to get on board and support the decision. And that’s an expectation I have of my team. So I give this document to every employee the day they start on the job. It’s super helpful in kind of just sort of setting out my general expectations of how we’re going to work together. But you also have to set what I call you know specific expectations which are expectations about a specific task or project that you’ve asked someone to complete or you’ve delegated to someone. And I think specific expectations are a lot like driving directions. Right. So imagine you’re trying to get somewhere and your brother in law gives you directions and he says hey I want you to go down Highway 1 and when you get to the IHOP take a left and then keep going. And so you get in your car you start driving down Highway 1 and BAM. This is what you see – a Denny’s. And you’re like OK well what do I do right? Is my brother in law an idiot? Probably. Does he not know the difference between a Denny’s and an IHOP? Should I turn here or should I keep going down this highway for who knows how long until I see an actual IHOP? And the reason that you’re kind of stuck there is because you are a novice when it comes to that new town that you’re in. If you were an expert if you were at your hometown and he said Hey drive down the highway until you see the IHOP you would have just stopped him and said You mean the Denny’s? And so this is what we’re doing to our employees all the time we’re treating them like an expert when a lot of times they’re a novice. We’re not giving them enough information. We’re not making it clear when we delegate. So how can we improve this situation? Well one thing that we can do is we can be more specific about how much authority we are delegating to our staff when we ask them to do something. And this was like a revelation to me. It didn’t occur to me. You know I thought when you delegates something to someone you’re telling them take it. But it turns out there’s actually four levels of delegation and the first level is hey I just want you to assess the situation, do some research and report back to me before you take any action. Level 2 is hey I want you to handle this but give me regular updates so I can course correct along the way. Level three is hey handle this and just tell me how it went at the end. And level 4 is I never want to see this thing ever again or hear about it just make it go away. And I love these levels of delegation I have them taped on my monitor to remind me to use them when I’m when I’m delegating something because usually I know what level I want the person to do but I forget to tell the employee and they’ll go off and try to make the thing go away when I actually just wanted them to do a little bit of research and then report back. And so this is great when you’re delegating to an individual but there’s a tool I like to use when I’m delegating to a team because in a team there’s way more options or opportunities for people to get confused. So the tool I like to use is called RACI and it stands for Responsible Accountable Consulted Informed. And this is how you use it. You just tag people with one of these words to clarify their role on a project. So if I tag you as responsible it means that you’re gonna be responsible for some activity or some task on the project. And usually most of the people on the project get tagged with responsible and they could be responsible for different things. So I might be responsible for the documentation you might be responsible for support or something like that. If I tag you as accountable. It means you are the one and only one person who is accountable for the overall success of this project and if something goes wrong it’s your neck that we’re gonna grab. People who are accountable often are also responsible for certain things on the project as well. If you’re consulted it means we’re gonna consult with you before we make any decisions. This is usually a risk mitigation step. And so the person that you’re consulting probably they’re familiar with the client or they’ve worked with this technology before or something like that. And then finally informed means we’re gonna keep you in the loop but we’re not going to hold off making any decisions. So we’re just going to copy you on some status reports invite you optionally to some meetings and at Bluefish we use RACI it’s just a shorthand we use it so much we’ll be in a meeting and we’ll literally say Hey who’s got the A on this little task or project? Or hey I want to be consulted on the technology choice because I’ve got some ideas. And it actually works great for a team that has worked closely together a lot and kind of knows for the most part what everybody’s gonna do. But sometimes you’re on a much more complicated project or initiative or you’re working with people that you don’t work with normally. And when that happens we break out Big Brother which we call the RACI matrix. This is just a spreadsheet, it’s got team members across the top and then areas of the project down the left and then in each cell you put one of the letters of RACI. And so what you’re really doing is taking the kind of overall project RACI and you’re breaking it down into lots of teeny tiny RACIs and it’s just super great at clarifying particularly if you have new team members and you’re not used to working together yet and you want to just be kind of pedantic about Hey what what am I counting on you for.

So these are great tools for kind of project delegation but I would say the single most effective way to set expectations with an employee about what it is you expect them to do over the course of their job is to have formal quarterly objectives. And this is when you sit down with your employee and you decide together what they’re going to work on that quarter. And it doesn’t have to be complicated or hard to track. We just track it in a spreadsheet. And so I’m going to give you my kind of tips on how to have a great setup great quarterly objectives. First tip: quantity. How many is too many? I think no more than four or five objectives a quarter. These objectives should be agreed to by the employees so they know what they’re signing up for. And I like to give the objectives a weighting. And so we have a point system. And so I’ll give each objective a certain amount of points and they’ll add up to 100 points. And this just lets them know hey a 30 point objective is worth three times more to the company than a 10 point objective. I like to have a mix of individual objectives that are owned completely by this person and team objectives where they’re going to have to collaborate with their team in order to accomplish the goal. And there’s different kinds of objectives. So we have a binary objective where you either did the thing or you didn’t do the thing. We have a percentage objective which is usually tied to some operational metric in the company that we’re already tracking – like how many emails do we send out every quarter. And so you know the goal here would be 30 if this person only sends out 15 emails they’re gonna get half credit for this objective. And then the third kind of objective is a management discretion objective which is a lot like the percentage but we don’t have a formula for it, I’m just going to decide how well you did on this objective how much credit you got. And when I first started in my career as a good engineer I tried to have everything be a formula that I could manage everybody by but eventually I learned sometimes you just have to be like the English teacher grading the essay and say you’ve got a B on this. So then so at the beginning of the quarter we sit down and we write to these objectives and we agreed to them and then at the end of the quarter we just crack open the spreadsheet again and score the objectives and you get basically a percentage achievement for each objective and that sums up to there at the bottom a to overall achievement of your objectives for the quarter. So super effective at making it clear to the employee what it is that you’re expecting of them to do kind of day in day out what’s their job. Now. You can’t just open this thing and set the objectives at the beginning of the quarter and then crack it open again at the end of the quarter you got to you know check in periodically to make sure people are doing what you want them to do. So the way I do that is just with a monthly check-in meeting. This is a 30 minute meeting on my calendar at once a month we just crack open the spreadsheet with each employee and they just talk about you know how far along are you. So this lets me kind of course correct a little bit if I need to or sometimes the business changes over the course of the quarter right. And so I’m willing to change an objective or change the weighting or remove an objective. My general rule is ultimately going to do that in month 1 or month 2 of the quarter. I’m not going to do that in the final month just because you procrastinated on this objective I’m not gonna remove it in the final month of the quarter. And so we have our quarterly rhythm right. We’re going to set these objectives we have our monthly rhythm we’re going to check in on them. We need a weekly rhythm as well to kind of drive progress forward and what I find is that I don’t try to manage individuals on a weekly basis. That’s just too much overhead. But I do manage the team on a weekly basis. And so to do that we use another spreadsheet. You’re sensing a theme. And this spreadsheet is kind of a weekly goals spreadsheet and it’s less about management and it’s more about coordination of the team members. So here’s how it works across the top. These are projects that we’re working on this quarter and down the left. Each team member and then that repeats for every week of the quarter. And when we start a project we will try to plan out every thing that each person is going to do each week to just kind of see you know how long we think it’s going to take. And you don’t know if you can see but these descriptions in the cells they’re very short. Just two or three words. So this is not a big project plan. This is just coordination. Hey I’m gonna finish the documentation this week or Hey I need you to get the APIs done. You know this week so I can do the UI development next week. That’s the purpose of this. So each week we get together we have an hourlong meeting on Mondays for each team and we go through this and we look at what you kind of said you were going to do last week and we just mark them green or red whether you did them or not. That’s no big deal. Nobody’s getting fired over this but it helps you kind of go back and see if there is a trend or you know maybe one person is constantly biting off more than they can chew that sort of thing. Super effective. It works across any team – marketing team sales team engineering team. Doesn’t matter. You know the detailed project plans for these of course are still kept in another system Jira or whatever. This is more about that you know high level communication.

So those are the techniques I use to kind of make sure that my team members know what I expect them to do. So let’s move on to the second reason why our fricken team members sometimes won’t do what we wanted to do and that’s that maybe they’re not motivated to do what they want to do. And the biggest mistake I see entrepreneurs making here is that they try to motivate their team using the golden rule and they try to motivate their team the way they themselves would want to be motivated. And this does not work because entrepreneurs are weirdos right. You are not like the rest of the world. And let me give you an example here – so see if you can spot the entrepreneur in this band. This is a wedding band and it’s very subtle but we’ll see if you can spot the entrepreneur. (VIDEO PLAYS) So that’s you right. This crazy madman weirdo who is clearly marching to the beat of his home drum right. This is how the rest of the world sees you because how do you motivate an entrepreneur right. You say OK hey look over there there’s a problem that everybody else is scared to tackle. Why don’t you quit your job take on a bunch of debt, take on a bunch of stress, become financially responsible for like a whole village of employees… and entrepreneurs we think yes that’s super fun. And of course everybody else runs screaming the other direction so you can’t motivate your team the way you want to be motivated you have to be more thoughtful about it. Now the good news is that we’re trying to motivate a bad ass team and they pretty much come motivated out of the package right. I mean that’s part of what makes him a bad ass is that they’re a self starter. So the main thing you want to do is just don’t demotivate your team. OK. So don’t get in their way. Don’t give a bunch of frickin loon nanny pansy rules. You’ll be more thoughtful about it. And when we think about motivating we usually think about you know the carrot or the stick. And I’ll tell you right now the stick does not work for bad asses because the main stick that you have as an entrepreneur as an employer is that you can fire the person. But this is a bad ass and then they’re not scared of being fired. They know they can walk across the street and get a job. So the stick doesn’t work. What about the carrot. Well the main carrot that you have is money and money is can be motivating but it’s tricky. In fact if you’re not careful money can actually demotivate your team. So for example if you don’t use money artfully your team is going to feel like a resource instead of feeling like a member of a team striving towards some common goal. Or what happens if somebody thinks they’re going to get a raise or a bonus but then they don’t get it or it’s not as much as they thought it was gonna be. I mean that’ll take the wind out of their sails. Or God forbid let’s say somebody else is getting paid more for doing the same job that I’m doing. Holy guacamole. If you if that happens you’ve just demotivated that person. So I think that money can be motivating but you have to use it more as a reward or a reinforcement of the things that you’re already asking your employees to do rather than as do it because I’m giving you this money.

So I’d like to do that with a bonus plan. And let me kind of give you my elements of what makes a good bonus plan. So first of all a bonus plan. Your bonus should be based on your performance, so the better you perform the more money you should get paid. Bonus plans also should be based on a short time horizon. If you have a yearly annual bonus then you know the lure of getting some check in December is not going to motivate me in February. Also the bonus should not be a huge percentage of the employee’s overall compensation because you don’t want them to feel like a mercenary just doing it for the money, you want them to feel like a member of a team, and this is just a little reinforcement. And then finally the employee should know what their bonus is going to be in advance. And they should know what they have to do to attain the bonus. So this is a long list right. This seems pretty hard but it turns out it’s not so hard because we already have a system that will do all these things that meet all these criteria. And that’s our quarterly objectives and the only thing we have to do to take these quarterly objectives and turn them into a bonus plan is add the money. So let’s add the money. This is how we do it. We take we pay a quarterly bonus that’s based on a percentage of the employee’s quarterly salary. So a junior employee might get a bonus of 5 percent of their comp of their salary and a more senior employee might get 10 or 15 percent. And that percentage becomes their boom bonus goal for the quarter. And then whatever percentage attainment they achieved on their quarterly objectives, that’s the percentage of the bonus they’re going to get. And they can overachieve and get more of the bonus or they can underachieve and get less of the bonus. And so it’s lightweight it’s easy we’re already doing it. And one of the things I love about it tying compensation to the quarterly objectives is now it forces you to have quarterly objectives every single quarter. You can’t slack off because your employees will be knocking down your door saying hey I’m gonna get paid based on these objectives and we need to define these objectives so I know what I’m supposed to do this quarter. And so for my personality I require that kind of accountability of the employee also wanting to have objectives. And then there’s another kind of bonus which is a spot bonus which a lot of companies do this. If somebody goes totally above and beyond they might just you know write them a check for a thousand bucks or something to say thank you. And I found something for spot bonuses that is even better than money and that we like to use and that’s trips. So we literally send your employee on a vacation. And at Bluefish we use trips for lots of things. So your five year anniversary with the company we send you on a trip we give you an extra week of vacation. We give you $3000. We say get on an airplane go do something fun send us a postcard. If the whole company meets our profit goals you know at the end of the year then the company will fly the entire company to some beach resort or a ski resort. And so we’ll take a company trip as a reward for having a great year the previous year. And I got to tell you that going on vacation with your co-workers it bonds you together with your teammates in a way that you know the Christmas parties and happy hours can never do. You see them in a completely different context. And I have an employee who told me once he said you know what, I don’t even remember what my last bonus was because I just use that money to pay my bills. But I remember every single trip that you’ve ever sent me on.

So it is a cultural reinforcement as well as a as a reward but you have to be careful because money cannot manage your team. You have to manage your team. It takes hard work. You have to kind of be on them you know day in day out. And so what I like to use my sort of main tool in my toolbox for managing the team on a daily basis is what I call Mr. Smiley Face and Mr. Frowny Face. And Smiley Face is approval and Frowny Face is disapproval. And here’s how you use him. So smiley face, super easy to use. Just be excited! Just be excited about the work that your team is doing. That’s all it takes. Send them an e-mail, say hey that presentation you gave was freaking awesome. Or tell him in person or a handwritten note if you really want to blow their mind. If there’s a public slack channel you know a message that says hey have you guys seen the user interface that Fred is working on it. It looks amazing! You need to give them some acknowledgment some approval. Do it both in public and do it in private. You don’t have to write a cheque. You just have to say occasionally I noticed that a freaking amazing thing that you did. But if somebody is maybe does something that’s not so great. Then you’ve got to bring out all Mr. frowny face. And here you’re just channelling kind of the stern father. You know. Johnny I’m upset with you. You didn’t do your chores. That’s all it takes. You don’t have to hit him with a bag of bricks. You have to give him some punishment. Literally I’ll bring someone in my office and I’ll say Fred you know I’m disappointed. I thought you were going to have that documentation done last week. It’s not done. And I had planned my week around it being complete and you know when you say you’re going to do something I’ve got to be able to count on you that you’re going to do it. And that’s it. That’s all it takes. Just a little bit of approval a little bit of disappointment. These are bad asses. They want to achieve.

So why does this work? Well it works because as human beings we are social animals and more than anything in the world what we want is to be part of a tribe. Right. So these are university of Texas students at a football game. They’re all dressed the same. They all have waving their frickin hook em Horns. And they did not they do not like football this much right. Nobody likes football this much. What they like is tribe and the tribe told them this is how we spend our Saturday afternoons in the fall in this tribe. So in fact if you think about when you were in middle school what was the worst thing that could possibly happen to you was you would go to the cafeteria and you wouldn’t have someone to eat with, you didn’t have a tribe. This is some deeply ingrained psychological shit right here. OK so how can we use this to our advantage right. How can we turn our company into a tribe that has this effect on the employees. And so the first thing we have to do is we have to have rituals. Right. You’ve got to have got to be something weird about your company right. I don’t care what it is. It can be Hawaiian shirt Friday. It can be you know you start every meeting with a knock knock joke. I don’t care what the weird thing is. But if your company looks and feels like every other company then it doesn’t feel like a tribe right. It’s just bland. Another thing that you have to do is you have to reinforce the tribal customs. You have to teach the tribal customs to your employees. So the way we do this at Bluefish is we have a weekly kind of all hands company staff meeting and there’s literally an agenda item on that meeting called praise. And in that section of the meeting anyone in the meeting can praise any other employee for doing something great in the past week. And this is just the tribe reinforcing people and saying hey this is what’s important to us. And when you give your approval to someone what you’re saying is hey you’re you’re in good standing with the tribe you’re doing the right thing. And when you give your disapproval to someone you’re saying hey you’re violating the cultural norms of this tribe. And that’s not cool. So how do we do that practically in the company? We do it with a co-worker feedback survey which is a short survey that we send to people. So you would receive this survey about your co-worker Fred. And we’ll do it once or twice a year. And it’s  pretty short. It’s got you know a handful of questions but there’s two most important questions on this survey. And the first one is overall how would you rate Fred as a member of your team? And the second question is what if anything does Fred do that interferes with the functioning of your team? And then we take this feedback and it goes to the manager and the manager anonymises it and obfuscates it and then uses it to coach the employee. And I will tell you the single most motivating thing I have ever seen in any business setting is when the team tells one of the members of the team you’re not cutting it, you are a meh teammate. Or you are doing this thing you’re not finishing your deliverables, it’s impacting how this team functions because now I can’t do what I need to do. I people I’ve seen people change their work habits 180 degrees because their team came down on him and said you know you’re not cutting it but we’re of course a bunch of introverted software developers when I can do that to our face. We got to have a form that we fill out to make that happen.

So while we’re on the subject of manipulating people psychologically. Let’s talk about this guy who’s Kurt Lewin. And he was a famous psychologist in the early 1900s and he came up with this framework for thinking about behavioral change. And what he discovered is that whenever you’re trying to change someone’s behavior there’s two forces external forces exerting pressure on the person. So there is a driving force that is pushing them to make the change. And then there is a restraining force that is preventing the person from making the change. And the very counter intuitive key insight that Lewin had is that the restraining force has all the power. It is the more powerful force. And so if you’re trying to get someone to change their behavior what do we normally do? We normally load them up with incentives we normally push on the driving forces and try to create more driving forces which are weak forces when instead we should be looking at the restraining forces and trying to remove them and asking ourselves you know why doesn’t this person already do this behavior. How can I make it easier for them to do this behavior. And I’ll give you an example. So like most of your companies I would imagine we have daily stand up meetings for our development teams and everything I’ve ever read about a stand up is that it should happen first thing in the morning so everybody can plan their day and then get to work. And so our stand up meetings were at 9:00 in the morning and we had a problem that is at once or twice a week somebody would miss the stand up meeting or they’d phone in and offer a bad crappy connection. And so this is a big problem for us. So we did everything we could think of to try and improve the situation. First we made stand at meetings mandatory. You’ve got to be there. Then we pulled out old Mr. Frowny Face. And I pulled people aside and say I’m disappointed that you didn’t come to the stand up. That didn’t work. We even made attending the stand up meetings part of people’s quarterly objectives. And it did not work if people would report for a short bit of time and then they would revert back and once or twice a week somebody would miss a stand up meeting. You know what worked? We changed it from 9:00 in the morning to 11:00 in the morning. We never had a problem ever again with people coming to the stand up meeting. We just made it easier for them to attend. So if you have a nagging problem in your company instead of loading up the incentives think about how can you make it easier for people to do what you want them to do.

All right so let’s move on to the third reason why my team won’t do what I want him to do. Maybe they’re just not capable of doing it. And you know it could be that the problem is a skills problem that you have an employee who’s not performing and the problem is they just not have the skills to do what you want them to do. But unfortunately my experience is that unless that person is brand new to the role if they are not performing if you’ve made clear what your expectations are if they’re profit motivated and not demotivated and they’re still not performing it’s probably not a skills problem. It’s probably a personality problem. And what I mean by that is that they may not have the ideal personality traits to be successful in this role. So if you have a project manager who’s not detail oriented who doesn’t love to make lists of things right. They’re probably not going to be a good project manager no matter how much training you give them or let’s say for example that you want to hire a marketing person. So you’re going to hire a marketing director and you go out and you do a job search and you find an absolute bad ass somebody who has been successful in every role or job she’s ever had great references 15 years of experience. You bring them into your environment. And she’s not performing in your environment. And this happens all the time. What why is this happening. Well it could be that the person that you hired is a creative marketing person right. And maybe you needed an operational marketing person. And my general experience is that people who are creative geniuses are not always super strong in operations and sometimes vice versa. And so you have to be more thoughtful about you know what are the traits that you need to be successful in the role and if it turns out that this happens to you and you hired a creative person when you really needed an operational person, there’s almost nothing you can do about it. I’m sad to say you’ve got to move them out of this role. They are never going to be successful. So you have two choices You can either move them into a different role where their personality traits are a good fit or you have to terminate them. And this absolutely breaks my heart because this is completely preventable right. It’s a huge blind spot for most companies. We’re not looking at the roles and thinking about what personality traits are critical. And then we’re not looking at the personality traits of our employees and making sure we don’t do a mismatch. So this is why I love personality tests. I love them because they give us a common language to have these kinds of discussions. So for example my personality – I am awful at repetitive tasks. Sso anything administrative like filling out an expense report or returning phone calls. I put those off and I never end up doing them. And the personality tests that we use in our company it has a word for people like me. It says I have low follow through. That’s what it says and it sounds awful but it’s actually great because in meetings if we’re passing out action items and I volunteer for an action item my team will say no no you shouldn’t take that. You have no follow through. That’s never gonna get done. I’ll take that action item. But we did and we don’t think of these personality traits as being either good or being bad because the flip side of my low follow through is that I’m very comfortable improvising and thinking on my feet. And so if a client comes in and they have some last minute request and the whole rest of the company is like we need hours to prepare for this I’m like No problem I’m going to wing it. Right. And I’m very comfortable in that environment. So it’s really more about making a fit between your personality traits and the ideal personality for a role. So this is a list of some of the personality tests that I like and I’m a huge fan of personality tests. I’ll take one anytime anywhere. So the one I I like to use the most is called the Kolbe index. But I don’t think it matters which one you use because I just want you to use something so that you have a common language that you can use to discuss. I want you to evaluate your positions and think about hey Fred was really successful in that role and Bob was not. So what is it about Fred’s personality is different from you know Bob’s personality and have those kinds of conversations.

So let’s say that we get to the point where you know it’s we have this problem maybe we have someone who’s just you know not a fit. They they’re just not performing and we realize that we need to terminate this employee. So the question now becomes how do I terminate someone with compassion and respect and caring. And so if you look at kind of the life cycle or the time line of a struggling employee it starts out when you suspect that this person is not performing you know is not going to work out. So you get an inkling. And then some time passes. Right. And then you come pretty sure that this person is not going to work out. And then some time passes and you’re like OK definitely this person is not working out and I need to terminate them. And if you want to terminate someone with compassion you actually have to start way back here because my number one rule is when you terminate someone it should never be a surprise. It is going to be a shock, don’t get me wrong it’s going to shock their system but it shouldn’t be a surprise. So what do you do when you suspect that somebody is not going to work out? Well at this stage you need to focus on recovering that employee and helping them make it work fix the problem find the problem get them a coach get them a mentor reduce their workload so maybe the problem is they’re overwhelmed. And increase your meeting frequency with this person. So I had an employee his first quarter on the job. He didn’t meet any of his quarterly objectives. What I dug into the problem and I realized he was getting stuck and he was scared to come talk to me. He didn’t want to look weak. He didn’t want to waste my time that was his excuse – I don’t want to waste your time you’re so busy – but he wasn’t getting his job done. So all I did was I put a weekly meeting on our calendar and then every week he would just show me what he was working on and I gave him a little course corrections or I you know and advice and tips and I got him unstuck. And then in that second quarter he achieved all of his objectives. Right. And what he learned was oh Mikey’s not so scary. I can come to him and we were able to go back to our monthly meeting rhythm. So sometimes all it takes is spending a little more time with somebody who’s beginning to struggle. So let’s say you do that and it doesn’t help and now you get to the point where yeah I’m pretty sure this person is not going to work out. Well what should you do then? Well here you kind of need to start laying the groundwork for a future termination. And I don’t mean from a cover your ass H.R. legal point of view what I mean is out of fairness and respect to this employee you have to tell them their job is on the line right. If you do not improve you are not going to be working here any longer. Give them a chance to improve. And when I have that conversation with someone I don’t like to use the word terminate or fired I just think those words are harsh. So I like to use the word replace. So I’ll say you know hey Fred. You know I really want this to work out. You know I really do. But it seems like you know every deliverable you produce there’s some problem and I have to go in and fix that problem and I feel like I’m doing my job and your job. And that doesn’t work for me. And so I need to see a drastic improvement in the next 60 days or I’m gonna have to start looking for a replacement. That’s that would be the conversation I would have with someone. Another thing that I would do is start encouraging them to look for another job. Have that conversation about fit your ideal you know traits are not a fit for what we need and let’s help you find a job somewhere you know where your personality traits are a great fit because it’s so much easier to find a job when you’re already employed for crying out loud than when you’ve been terminated and now you’re damaged goods. So let’s you know let’s do two things let’s work on getting better here but let’s also why don’t you go test the job market and see if there’s a job out there that’s a better fit for you. And then if that doesn’t work and you know it comes to the point where you feel like you have to terminate this person how do you do that?

The key thing to you know to remember is you’ve got to terminate somebody with empathy because this is like the worst day of their professional career. You know we often always think Oh it’s awful for me to have to terminate you know… Screw you! It’s awful for them. Right. This is a bad ass. They are not used to failing. Right. It’s probably your fault that they’re failing because you didn’t do the personality trait analysis you know. So when you have that conversation with them don’t make it about the person you know make it about the fit you know your strengths are not just not a fit for what we need. Also take some of the blame on you or on the company even if it’s not your fault. Give their ego a break. You know take some of the blame. Say something like Man I was really hoping that we would be able to level up your skills to where we need them. But we just haven’t been able to. That’s probably the company’s fault but that’s kind of where we’re at right now. So that way he can go home and talk to his spouse and his friends and say yeah that stupid company they didn’t give me enough training right. And he can blame you. And that’s fine. And then of course you know use your network and help him find a job. And the way to do this is to talk about their strengths. So if you ever see me on Facebook or Twitter say something like you know hey I’ve got an amazing employee who’s you know looking for an entry level position in marketing. They are in sales now but they want a career change and they’re super hardworking very dedicated very creative. That’s me pushing out their strengths to other people and not worrying about why they didn’t fit. But you know advertising what they’re great at so someone else can see that and and feel like hey that’s I do need somebody like that in my marketing department. Because the key thing we all trying to build companies that are great places to work. And I got to tell you it’s not a great place to work if the people who’ve left your company no longer think it’s a great place to work. Right. So they still have to believe after they leave.

And that’s my time. I’m happy to answer questions. Appreciate it.

Mark Littlewood: OK. Thank you Mikey. Just for anyone with a white lanyard I people that haven’t been before the way that I try and do questions get through as many as I possibly can. So we’ve got two mics. If you want to ask a question there’s one out there from Max. You put your hand up and we’ll get you got you the microphones. I know most people and I’ll try and remember other people’s names as long as you go through. So let’s kick off with Max but if you’ve got a question. Put your hands up. Make sure you got the mikes over as quickly as possible. Right Max.

Audience Member: Hi. So you mentioned the short term nature of compensation and the bonus of some. What about options how do you think about options in the levels of the organization, where do you think the options play in the overall motivation of people?

Mikey Trafton: So I think stock options… You know I hate to say this I think they’re basically fantasy money. I have worked for multiple companies where I have given people stock options and they didn’t get jack for any you know because the company went out of business. I’m an angel investor I’ve invested in over 20 companies that I won’t make money on any of those companies because the sad reality is that 95 percent of all startups fail right. And so the point at which options are powerful is early in the company that’s when the quantity of options is going to be high enough that you know it can make a meaningful change in your life. And so that’s when it’s riskiest and most likely to fail. And once the company becomes more sure that it’s going to succeed the options are not going to be worth that much. Right. So for most companies you know if you become a multibillion dollar you know exit then those small options will amount to something. But for most companies who are going to exit in the 50 to 100 million dollar range those options are just not going to make a meaningful life change. But they are very important in signalling we’re all in this together and we’re all working for a depressed wage. So usually what happens is you work for less money than you could get somewhere else but you get the options to kind of compensate. So you’re taking part of your salary and you’re banking on you know on this upside and in that point the fact that we are all in this thing together that’s very powerful. Also I’ll say is that a lot of entrepreneurs are stingy with their options. Go the other way. This company is going to fail. Right. Ninety five percent because companies are going to fail. Your company is going to fail. Be generous with the options. They’re not going to be worth anything anyway. Most likely. Right. So be generous with them because it does a better job of creating that we’re all in this thing together it’s great.

Mark Littlewood: Great question. 20 companies that you’ve invested in… I’m thinking that if those 20 CEOs came to BoS you’d probably up your odds.

Audience Member: Thank you for a very provocative first talk and kicking it off in style. I think the issue of Money is something that us IT people struggle with and I think particularly different motivations salespeople and IT people are motivated to by different ways. I personally found IT people are very keen on fairness rather than the exact sums. I was interested in your scheme of sharing numbers by basing it on the quarterly options. And I wondered how you managed to turn that both into a team motivation and also how you managed to avoid the classic disconnect we have in the UK financial system where our company loses a huge amounts of money and we still somehow get a bonus or do you not have an issue with that?

Mikey Trafton: Well so I think that I agree that you know money is a red herring. Of course we’re not gonna go work for free or most of us aren’t. Right. But once you reach a minimum you know kind of amount of money that you that you need, the motivating factor really falls off a cliff. Right. So for me I’m not rich but I know my kids are going to college right. So I’m not worried about that my kids are going to be fine and it’s going to take a lot of money. You know probably millions of dollars to motivate me to do something that is going to make me not so happy. I’m pretty happy I got a great life right. And so if you want me to do something that’s kind of outside my comfort zone at this point in my career, my age, the success I’ve had I’m going to take a ton of money to motivate me. But when I was 24 just a peanut butter sandwich would do it right. So I think that it’s a red herring and you know an immature, inexperienced, unsophisticated manager just goes straight for money thinking at the only option. But what’s better to motivate people are these more human things like we’re all striving together or whatever is important to you. You know it’s important to you that you know you have a sick spouse and you want to work from home where you can help you know take care of that person and that’s the most important thing to you? Then yes you can work from home you know that those things are what’s more motivating. And I do think that you know if a company loses money and is still paying bonuses you know there is a legitimate strategy for that right. It’s usually with very well-funded companies where they know they’re going to lose money for many years. So it’s probably not the strategy for the folks in this room but it is sometimes a legitimate strategy. Thank you.

Audience Member: Coming back to your reasons people don’t do what you want them to do. One of the ones I run into a lot is they completely understand what I want them to do but they don’t agree. So I’ve hired a bunch of really smart business folks they all think they are in charge of private strategy not me. Right. And they’re always picking at my strategy or direction. And the answer isn’t I don’t understand it’s that I think you’re dumb. Keep/lose strategies/choices?

Mikey Trafton: So I would put that in the category of you know general expectations. Right. So I even mentioned that that’s one of my general expectations for my team is that I want to hear all that dissent when we are making the decision. But after we make the decision I need you to get on board. In fact I in my little How To Work With Mikey document, I literally say I have low follow through as I mentioned. And so I have this in the document it says I have low follow through which means that I start a lot of things but I don’t always finish them. And I need a team that will pick up the things that I drop. Unfortunately there’s not much room for this kind of personality in a small company. It can only take tolerate one or two of us. So I need you to not be this way. Basically right. And so when I’m hiring I’m looking for that. In fact you know for that one thing that I do when I’m hiring in the interview process I call it picking a fight. I pick a fight with the candidate. And I have a few interview questions where I can argue either answer, the positive or the negative. So I ask the question and no matter what they answer I take the other side and I basically fight with them in the interview to see how they handle it. How does the CEO of the company coming down on me when he has all the power he has, I’m not even hired yet how does that candidate handle that situation. And I’m looking for someone who will fight who won’t just you know, ‘Oh yeah you’re probably right’, who will stand up for what they believe. And we’ll have a meaningful engagement I’m trying to see if they can convince me or if I can convince them. And so I think that basically I think that these are personality traits that I probably wouldn’t want in my company is somebody who is going to disagree with me and then sabotage the project because they don’t believe and believe in the direction. OK my competitors should have this employee on their team not me.

Mark Littlewood: We’re out of time but since it’s your first time…

Audience Member: I have a simple question. I just wanted to know what your thoughts are about publishing salaries or publishing partial salaries within the company in the context of maybe 10 person company and in the context of a 100 person company.

Mikey Trafton: So I think it is super Jedi move. I think you are super bad ass if you can publish the salaries in your company. The only company that I am aware of that does a great job of this is… well I’ll say there’s two ways to do this. So there’s the Joel Spolsky way where he says OK I’ve got the system and I don’t care what you’re making in your last job you have the skills that you plug in you get paid this amount. And I think that can work but you have to have things about your company that are so amazing that they allow you to compete in the marketplace for talent on something other than money. So you know you go work. I get to go work with Joel at Fog Creek or whatever and get these amazing companies then. That’s a lot of what I’m looking for and the money maybe a secondary. There’s another company whole foods and Whole Foods is kind of the classic example good Austin based company. And they publish the salaries of every single person in the in the company. You can go in literally if you work there. There’s a book in the back of the store and you can open it up and you can see what everybody makes. That guy washing the cabbage in the back you can see what that guy makes. And I heard one of the H.R. leaders at Whole Foods speak once – I was speaking at a banking conference and it was making all the bankers freak out. Right. And the guy said when you do this it will force you to be able to defend every salary in your company. Right. It will force you to be able to say yes of course Fred makes more for washing the cabbage than you do because Fred washes twice as much cabbage per hour than you do. And he never has any you know mistakes in your cabbage is muddy half the time. Right. And so being able to defend those salaries. So I I’ve never done it because I don’t have that level of discipline and I don’t I don’t think I could you know defend those salaries. But if you can do it It’s frickin Jedi. All right. Thanks everybody for your time.