Jack Stack, President and CEO of SRC Holdings - Opening keynote at the 2018 Great Game of Business Conference. Jack addresses the principles of educating, empowering and engaging your employees, the importance of following these tenets, and his prediction of a recession.
Episode with guests: Jack Stack
President and CEO of SRC Holdings
(This episode was recorded in September of 2018.)
Key Episode Take-Aways:
1. People support what they help create. (click to jump to this topic below) We use a critical number for one specific purpose -- once we accumulate all the data from the people and we've talked to the people. And they've laid out their strategic plans, okay. And they laid out their financial ratios for a given year, we take all those financial ratios together, and we huddled in a room, and we say to ourselves, what is the one number that can take us out? What can be this the most all right? I mean, critical is critical is critical is critical. All right. You know, I'm proud to say that this year, we're having record level of activities, and almost every single element of all the financials across the board.
2. When you are faced with the hard facts, you can either believe them or do something about them. (click to jump to this topic below) I'll say one thing, you can't beat the facts. And one thing scary about the facts is that they hit you right between the eyes, now you got a choice, you can either believe the facts or do something about it. Or you going to believe the facts or you could put your head in the sand. So just here's some of the facts our on roll. One from 1436 people at the beginning of 2016 to 1812 people by 2018. But that's not the hidden numbers. If you apply this, this methodology by which we bring people in and we bring people out and you take the flex times and you take the temporary help and the kids from the colleges and things of this nature, and you really want to apply a 25% turnover rate.
3. Being able to create a business that people can view as a lifestyle that they enjoy rather than dread. (click to jump to this topic below) We are investing a tremendous amount of money trying to figure out how to bridge that gap. How not necessarily to be the employer of choice, okay, but to be able to create a business by which people can see that this is a lifestyle. This is a career path. And I'll give you these, these are all available, I don't expect you to read them, okay. But on the right side are all the things that we have done. And we've initiated in the last month to be able to create an attraction program inside of our organization
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The "Change the Game" Podcast is sponsored by Prairie Capital Advisors, helping businesses think forward. For more information, visit prairiecap.com/ggob. That's prairiecap.com/ggob.
Welcome to the "Change the Game" Podcast, where we share stories of open book management and highlight capitalism at its best. Thank you for tuning in to this episode of the "Change the Game" podcast. This episode we pulled out of the vault, Jack Stack's keynote speech at the 2018 Great Game of Business conference. In his keynote, he addresses the principles of educating, empowering and engaging your employees the importance of following these tenets, and his prediction of a recession.
Steve Baker 0:56
The man who started it all, the CEO of SRC holdings, and my pal Jack Stack.
Jack Stack 1:20
They put that beat on so I could walk up those stairs to have some rhythm, so I don't fall over. Mr. Biggers fantastic. I think I mean, does that guy have it all? He has the looks the charm. He has the voice, you know, boy he is real hard act to follow. There's definitely a gap between him and I believe me. I'm going to try to do several things here in the next 45 minutes. I'm up for manufacturing, and I don't learn they came out of manufacturing, manufacturing is always trying to figure out how to do multiple things at the same time parallel process. I don't know if you experienced this with a cook in a kitchen. Every time we touch something, I put it away. If I make a move, and I make it twice, I'm kind of mad at myself. So, I try to figure out how to go from maybe the toaster to the to the refrigerator and get as many things as I can then I go back to the toaster. my wife is totally different. My wife doesn't throw doesn't put anything away. flours all over the place. And so, we don't survive very well in the kitchen. The point being here is what I talked to you today, I'm going to try to deliver maybe three or four points at the same time. The first point that I obviously want to make is that this couldn't be done without you. I appreciate Mr. Baker saying that this is started here. It has been started in the hearts of many, many people. All right, Bo and I are very seldom in agreement on anything. But one thing we did agree upon is that when the book came out, it wasn't necessarily about rocket science, it just touched a lot of hearts, okay, just touched a lot of things inside of people that they really kind of felt it was the right and the right thing to do. And so, I have to tell you, and I was telling john at the table earlier, that you have no idea what we get from you, I can come up here and I can tell you where we're at. And I can tell you, you know, because I'm still an operating CEO, we have a living laboratory, we practice it every single day, I can tell you where, what we've learned what we mistakes we made, okay. But a lot of times, I can come here and just tell you what my biggest problem is. And then by the end of this conference, you solve it for me, you don't know that you are a vast wealth of knowledge. And if you don't realize that you need to be talking to the people next to you, because this is a tremendously outstanding group of people who lead with their hearts that really are here to do and learn and to do the right thing. So, one of the things I want to do is basically kind of just give us a refresher course, in terms of the business. And I think many of you have seen this before. This is kind of a really simple way of trying to explain what the Great Game of Business is just three inner changing circles, and it has this point in the middle of the circles where they all emerge. I think one of the things that's interesting is there's a lot of definitions and terms of the critical numbers. I'd like to clarify that after I touch on some of the macro elements of the bigger circles, okay. The first circle is obviously we've always believed that if someone's going to come into one of our business It would be really good idea to tell them what business they're in. I mean, not only from the standpoint of their skill sets, but also who do they compete against. All right. You know, some people don't like to use sports as analogy. But you know, it's really simple to say that if you're going to play any kind of a game or any kind of sports, it's probably a very good idea that you know the directions, you know the rules, and things of this nature. And we have a tremendously intense process, in terms of mind dating as much as we possibly can relative to markets relative to competitors, relative to, you know, what are we going to do to be able to win in that particular area? Once we set up the metrics once we set the parameters, okay, now, we got to figure out how to communicate the information to the people, how do we convert the stories into the numbers? How do people understand the numbers? How do the people believe the numbers that we're giving them, we came to the conclusion a long time ago that the only way we can get them to believe the numbers is for them to submit the numbers to us? And it's ironic to see just how hard people are around themselves. And many times, we're faced with kindness, try to slow it down, even though we've provided them all the data and circle one, which will tell them what you're the best in class, what are the highest metrics? Alright, who's outperforming in terms of the market is, but time after time, again, our people will come in and try to exceed that, we kind of slow it down with providing a stake in the outcome, we said, look, you know, we just believe that we've got to be a top of our class relative to the market. We've benchmarked a lot, our compensation programs, our benefit programs, to be as high in the market space as we possibly can. And then we believe in anything in excess of that, right? If you beat the market, they deserve better than markets. So, we then have incentive programs. And I'm, you know, I'm giving you a kind of a view of this at a 40,000-foot level, okay. I mean, that's what its simplicity is I give them the directions of monopoly, you know, obviously, start playing the game, everybody understands what their net worth is in a program at nature, and then obviously, left standing as the person that made the right property decisions in the course of the game something of that nature. Okay, so that's the overview, I really want to kind of get to is a critical number. Because people use critical numbers for a lot of different reasons, you can use your critical number for any reason that you want.
1.People support what they help create.
We use a critical number for one specific purpose -- once we accumulate all the data from the people and we've talked to the people. And they've laid out their strategic plans, okay. And they laid out their financial ratios for a given year, we take all those financial ratios together, and we huddled in a room, and we say to ourselves, what is the one number that can take us out? What can be this the most all right? I mean, critical is critical is critical is critical. All right. You know, I'm proud to say that this year, we're having record level of activities, and almost every single element of all the financials across the board. I mean, our critical numbers, not sales, our critical number is not earnings. Our critical number this year is live cash flow. I know as is not arrogant, I am not bragging, this is done by the people inside of our organization. Because I believe that the critical numbers that most organizations change quite frequently, whereas most companies will keep a profit-sharing program for a really long period of time. We found out early in our careers, that profit sharing programs get bored, boring, they don't communicate things, a lot of people don't understand where they get them, you miss the education process by not having the right critical number, the opportunity to be able to communicate, to learn to achieve to celebrate. But more importantly, what we look for in terms of the critical number, what is the long-term effect? What's the one that could take us out? I see a lot of operations and they know what their critical number is, but they're more focused maybe on net income, or maybe they're focused on cash flow. But I also don't think that a lot of cases they don't have the courage to really attack the critical number. I mean, like we would see my chair of people, the Great Game people working with new people. I mean, it's like, just start anywhere, just start with a number, get everyone behind it. And then this is the beginning of it. And we debated A long time ago. Do you start out with knowing to teach the rules first? Or do you really go back into a stake in outcome and, you know, I've always been a believer in give them the big picture, give them the statistics, okay. And what, talk about the vulnerabilities, let's put the vulnerabilities on the table. And then let's use that third cycle in terms of risks and reward, and if in fact, they're able to overcome the numbers, you know, then we can make certain that we're secure over a long period of time. We talked a long term yesterday, I'm going to break into groups in terms of our forecasting techniques, and we're kind of obsessed with our ability to be able to forecast so far out and so accurately. Our forecasting technically runs almost in the 96 percentiles from actual to plan on an annual basis, which is remarkable. Over the last five years, our earnings based on our forecast, when you go back and look at the actual is the plan are now running at something in 93% accuracy. And they would have been in the 96% accuracy had not the barrel of oil dropped from $100, a barrel to 50, which we didn't have in terms of our analysis, knowing the rules of the game, although we did know that if you're going to play in the oil industry, its boom, or its bust. And it's really seductive. And they're really, really high margins, we got greedy, and we had no contingencies, and we went in in there. And about the year 2014, or 15, we ended up writing off $7 million dollars. After we massaged ourselves with those earnings in the three previous years. had we hit number, the accuracy, which comes from the people inside of the organization is almost at 96% of the top line, 96% for some time, that is a very, very powerful metric. We often believe that we can accurately forecast we can control our business. Sometimes we say we can control the world if you can figure out how to forecast that you know what's coming that you can see around cards. And you do that by this obsessiveness in terms of the data that you mine constantly you mine daily, you mine and every sales call you mine, at the gathering and the information that you can take from everybody else. So, one of the things I really wanted to do is put this emphasis on this critical moment right. I mean, for 35 years, I can't tell you the number of critical numbers we've had, we've had a multitude over 50% differences in critical numbers. um we had the opportunity in 1970s, when we were going through high interest rates and slowing of economies and the Fed was dominating in terms of what was happening in the marketplace. And we got a chance to listen to Alan Greenspan. And some of us really needed some help and trying to understand when the Fed makes decisions that have tremendously impact on the economy. And we said to them, we said lib we don't understand them one money and then two money and three money and five money. We don't understand how this works this or could you give me three simple reasons on how we should be looking at the economy. How do you guys forecast? You know, we'd like to take that information back and like to work in some of our plans. He said, well, it said this is kind of a simple way of looking at it in terms of the future. He said, we see a hot economy. And when we look at three issues, okay, one of those issues, and this is real simple stuff. One is unemployment rate, right. So, we're running at an all-time on unemployment rate in Springfield, Missouri 2.8%. I think under anything under five is a danger zone. The second thing he said is that we look at number of hours of work. And number of hours, our work week, and typically from 2009 to late 2016, it was well into the low, mid 30s. Okay, so in other words, the average associate in the United States State was running an average of maybe 35 hours. But if they have 35, goes to 41. It goes to 42. We know it's a hot economy, it's expanding, we can statistically see it. I don't know about you guys, whether you're working a lot of overtime hours or not. Okay, but we are we're one of us. difficult things that we're experiencing right now is this tremendous jump in terms of the GDP that went from 1.6%. To now in the fours. I often get a lot of people then when our government tries to stimulate an economy, they're so bad at math, they think 1.6 to four is only a 2.4% increase. In a manufacturing facility that's pretty dedicated as all involved in the GDP, we've almost got to double the size of our business, to be able to handle that 4% increase in the GDP. And the third thing that Greenspan said which I think was the most remarkable, he says, you'll watch how long it takes to get things. I don't know if each and every one of you had ever had the experience in terms of buying parts or being in the purchasing department. But our lead time parts now are in some cases, almost 180 days. And it continually goes out the lead times at parts I remember early in the spring trying to buy some lawn furniture. And the delivery promise was November. Well, it gets a little cold in November in Springfield, Missouri. I even went to a deli not too long ago and he just came back from St. Louis, and he couldn't get the oil for his salad, and he was screaming the fact that the delivery was six months. out, and he didn't know how he was going to meet his demand behind scheduled conditions occur because you can't give components okay? You're not getting them out in time. I talked to a person that makes Kenworth big classic trucks. They're 22,000 trucks behind schedule right now just in their cue because the lead times of the parts and the capacity that is available. So, they taught us that those are the three things that you look for in terms of trying to figure out where the markets going to be where the economies be, where you need to be, in terms of three years, four years, five years, 10 years down the road. Well, after four years of recessions that occurred over a 10-year period of time and taking into consideration all the stimulation that was going to occur in the economy, it was pretty safe to say that we're going to look at this thing slowly coming back out at 09 hat ramping up at a certain pace. But if we're not prepared for the ramp up in the space, we're going to have severe motivational problems inside of our organization. And the most, and the most significant number is going to be the fact that I'm doing really well this one. Can I get some help from the higher authorities? Like, you guys, are God? Can you hit me on three? Okay, well, give me three? All right don't the know, this is, mind boggling right? It's always death by PowerPoint. All right. And so, I don't expect you to understand or see anything of this nature. What I want to tell you in the face to my message to you guys, is it's becoming quite apparent that our critical number now is people. It's just so ironic that he started 35 years when we bought our jobs, because we're in the midst of recession, we got laid off. And we are so obsessively focused with jobs for 35 years, we'd always have held people first, we've always made certain compensations were reasonable. We've promoted people with the ability, and if in fact, they failed, we always created a safe landing for them. I mean, we were really, really sensitive. Because we didn't want to be able to put anybody in terms of a layoff position. And to this day, we've been very fortunate to have that at the most minimal level that anyone could ever experience. We respect the value of a job in Springfield, Missouri in 1983, they did not have jobs, I remember employment rate was 12%. And we were tremendously influenced, at the very beginning of making absolutely certain that we didn't close the factory. We made some acquisitions in 09, because we found that some factories were closing and there was people that were extraordinarily talented. So we made an acquisition relative to the talent of the people. So, our priority all these years was people. Never once in the 35 years, did we ever think about our people as being the critical number because we always thought we're doing the right things. And the left-hand column is attrition. When you go from that, 1.6, you go to that 4% GDP you explode. took us 18 months. And just last Friday, we were able to at least staff, our company to a reasonable level. So, we could stop working overtime because the morale was deteriorating so bad in our company, because we couldn't find people fast enough to meet the orders. I know that sounds like I'm whining, right? Like, you know, you're whining about sales, all right? That you're whining or complaining about, you know, opportunities that you have. But when you live in Springfield, Missouri, in your heart, your primary love is hunting and fishing, and being with your family. And you're working consecutive Saturdays in some kinds of Sundays, you've got to be able to make radical changes. And we have made radical changes, right? I mean, as good as we try to think we are our turnover rate is about 24 25%. Now you would sit there and say, well, geez, if you play the Great Game of Business and use all these benefits and things of this nature, but a lot of that 24% has been built into the way we've been able to run our companies. In other words, we have six colleges in our city. We started a kitting company. So, we allow the students to be able to sign in anytime between seven and 11. seven in the morning, they can come in we kit over 300,000 kits a year. All right. So, this gives them the opportunity to go to college work their hours in put some hours in flex times. This whole 24% includes, you know, temporary People in terms of agencies, basically, we looked at ways to make absolutely certain that we didn't necessarily have a layoff for our full time and people, we moved a lot of people who left the college scene and wanted to come back. A lot of them became supervisors inside of our organization. So, this particular program worked really well for us. But it really worked well for us. Because, you know, we could continually replace the number of people that were leaving because the job market had resources to replace the people. How many people in this room right now are hiring, having trouble getting people? Quite a few. Were so much like you. How many people really believe that this could be the number one clerical problem, in the next 24 months? Slows your business down? puts pressure on your people? put pressure on your customers, okay? I mean, this slowly came up to me, okay. I mean, it's slowly I mean, we have job security is number one, you know, we believe in Maslow's hierarchy of need. I mean, 24 consecutive years, we've gotten outstanding awards, for our government in terms of having safety programs and creating the greatest safest place to work. We communicate through our Great Game of Business. All right we do the huddles, we do the bonuses, we have big, big priorities, we just celebrated 35 years, we had the Beach Boys and who was the other one, Chicago 4000 people came to our celebrations, I we tried to make this a cool place to work. And then all of a sudden, you got to start hiring people, right? And you start bringing in new people. And before you look at it, I did a number the other day, we have now 740 people out of 1812 people that have been here, less than 36 months, we got a whole new group of people, we got a whole group of young people, all right. But the point of the matter is, we have been able to attract those people because of the programs that we have inside of organizations. Because we understand the millenniums, we understand that when the millennials want to come to work, they want to make a difference and one of the nice things about our culture is if you got you gotta wanna you can make a difference inside the organization. If you want to go to tuition refund and you want to go to college, you want to be a PhD will pay for your PhD, all right? I mean, there really is no reason if you really have any interest in getting a manufacturing and I know that it's a dirty word in office situation that you could have a career of you can have a future you can look forward to it will give you a financial trading skills training, right we have a healthcare program, by far is far outweighs any competition in terms of art. So, we thought we had it, all right, we thought we had it made. And then all of a sudden, we began to realize that the markets not there. The people are not there. And 1.6% growth factor. We can live with this kind of model. And a 4% growth factor. We can't live with them as well. Let me just give you some crazy numbers. And they all say I love numbers, but
2. When you are faced with the hard facts, you can either believe them or do something about them.
I'll say one thing, you can't beat the facts. And one thing scary about the facts is that they hit you right between the eyes, now you got a choice, you can either believe the facts or do something about it. Are you going to believe the facts or you could put your head in the sand. So just here's some of the facts our on roll. One from 1436 people at the beginning of 2016 to 1812 people by 2018. But that's not the hidden numbers. If you apply this, this methodology by which we bring people in and we bring people out and you take the flex times and you take the temporary help and the kids from the colleges and things of this nature, and you really want to apply a 25% turnover rate. That means that you really got to bring in somewhere in the vicinity. And I'll just read these numbers to Yah. All right. So, of the people that we brought in from 1436 to 1812. We terminated we'd lost we stay self-left. I mean whatever you want to call turnover, all right and again its relative to each program, we lost 328 people in 16319 people and 17362 people, we added 376 which I told you between 16 and 18 means we hired 1385 people in 36 months. How do you run a business like that? Well, thankfully, we've got tremendously skilled labor, talent, people, we've got programs, we've lived within the structure for a long period of time. And we've been very fortunate to be able to hang on. And that's what we've done. All right. We've met our customer expectations; our quality has been very good. Our behind schedule is getting up. But now what happens when you forecast an 8% growth? Go back to those three circles. And our sales and marketing people tell us the rules. And they're going to tell us that 8.8% is what we're forecasting compounded for the next five years. So now I start doing a mouth. All right. Now all of a sudden, I read Team 12, on an 8% increase is going to go to 1956. And by the year 2022. It's going to go to 2485. People. Let me just Demeter 8%. growth on the eight, the 1800 people, we got to find someone like 653 people just to handle the growth. I make thinking about the attrition. So, we got 653 to grow. Now all of a sudden, you got to figure out how to handle the attrition if we apply a 25% attrition rate. We got to hire 2086 people just to handle trends, just the turnover is the transition, that a number that would scare you. I mean is that a number that you would define as critical. Is that a number that will wake you and shake you to your core, even though you have done an incredible job from that attrition rate. So, what do you think our new critical number is? You know, it's not sales, it's not earnings. It's not cash flow its now people. What an irony, right? I mean people over your best assets you think you're doing everything well. And then all of a sudden, you reach an economic boom. And then the demographics and the economic boom work against you. anybody hear about how many baby boomers are leaving the market on a daily basis 10,000 that's been going on for some time. And that has been baked into these attrition numbers. But eventually, the well runs dry when that 10,000 is going to last until 2030. So, the availability is going to be somewhat shrinking. Now we get some other problems too. I mean, some of the problems that we have is that not too many people want their kids to go into manufacturing. Listen, we have a lot of different businesses. I'm not saying I don't want you to think that this is only applies to manufacturing, because we do have servers, we have technology and we have distribution companies, but I'm only using manufacturing because they have the lowest opportunity, the biggest challenge in today's marketplace. In other words, 70% of the people think we need manufacturing to raise the middle class to cut the gap. Unfortunately, less than 17% other, the adults want to send their kids in the manufacturing. When you go into the school systems, the basic phrase is get yourself a degree so you don't have to end up in a factory. That's the pool we that we are dealing with in our organization. So let me tell you what happens when you get a critical number. If you got the right critical number, you shred it, you tear it apart, you just look at every single compounded fraction total, complete number. I mean, you tear down your policies. And you become obsessed with a critical number because you know that that is going to be the number that's going to take you out over the long term. And I'm going to keep repeating what a critical number is, right? Because that's when all of a sudden you get the people engaged. Now we begin to find out what we got to do. Not only do we have to figure out how do we attract but basically, we got to figure out how to retain our new number in terms of retention and I’m still arm wrestling with our people is I want to see an attempt they don't think they believe they can get to 15 and in some cases. We have been able to get to 15 but we are spending,
3. Being able to create a business that people can view as a lifestyle that they enjoy rather than dread.
we are investing a tremendous amount of money trying to figure out how to bridge that gap. How not necessarily to be the employer of choice, okay, but to be able to create a business by which people can see that this is a lifestyle. This is a career path.
And I'll give you these, these are all available, I don't expect you to read them, okay. But on the right side are all the things that we have done. And we've initiated in the last month to be able to create an attraction program inside of our organization. In this particular case, you know, we started what we would call a third grader goes to work program, because the teachers told us at that time that you influence the child by the time, they're in third grade. So, what we did is we would get the buses in the lunches, and then we would go to the schools, and we would speak to the students, we tell them what they were going to see. We tell them that what dress codes that we had, we gave them job applications, they filled them out, they had to get references from their parents about good kids were, you know, we brought them into the factories. We sat down and did job interviews with them. We told them the importance of handwriting; we told the importance of why you got to fill out an application. And then we took them out on the plant tours to see what a manufacturing facility look like. And who do you think was the most important person in most cases on that factory floor? Anybody know? yeah. Donna. You notice work with Donna, Tommy forklift truck driver? And what an unbelievable experience when a third grader goes up to a machine operator, and you can pick the worst machine operator in the world, load them up with sodium pentothal may hate the company. But do you really think they're going to tell a third grader? You know how bad it is? You know, I mean we got a twofer on that program. But that wasn't enough. So, then we decided, okay, you know, what we've got to do is we got to get into the high schools. And so, they put together a place thing called GOcaps. It was in Devon; I think in Kansas City brought to Springfield 17. school districts got together and said, let's have classrooms, let's have degrees, let's have curriculums as close to the business as we possibly can. So, we took one of our companies, and we opened up our doors, and we provided classrooms and security systems, and technology to be able to actually have manufacturing classes, engineering classes, right in the business. And then from the business, we had the capacity to do 40 to 50 kids on the first in the morning classes 40 to 50. On the second classes. And what we did is we ran them into the all processes and procedures taught them about all the differences in terms of what manufacturing was all about. And they took a full semester, they got credit for high school, they got credit for college, we ran it for a three-year period of time, we ran 200 to 300 people through there. And how many hires Do you think we got at that particular point in time? Four you know, why, you know, goes to those programs, the bright flight the kids that are already in the A plus program, I get the kids that are already got their eyes set on medical school or technology or something of this nature, when we were trying to get was the C students. I tell the groups yesterday that one of the most impressive things I did one time was talking at Ball State. When I was at Ball State in Indiana, I noticed that David Letterman had provided a scholarship fund for CS students. How smart was that? And so how are we going to get to the C students. So, then we started to go down the distribution channel. We went through the superintendents, and then we went to the teachers and the teachers, when we would bring them into our factory floors. The only thing they could say is my God, this is clean. We didn't even know that this was really going on. We went to the counselors, and we talked to the counselors. All right, and we talked about do you have career paths, talking to people and, you know, trying to route this thing back in terms of trying to change the place of work, the councilors are too busy taking care of kids, we got behavioral problems, we had drug problems, and we kind of shifted away from the things and so we and we literally brought hundreds and hundreds of people through the organizations and provided as much information as we possibly can. And then we finally realized in one meeting that we had off site that you got to get to the parents. We as businesspeople got to get to the parents, we got to change the perception of the parents who believe 70% of our middle-class gap can be solved in manufacturing, but my kid doesn't really need to go there, and we've got to explain to them how would you like to send your kid to college debt free. We got to market ourselves in a different way than we've ever market done in the past. We got to talk to some football coaches or high school coaches okay that have done recruiting you know, in the home. We got to be careful in terms of our social media because there's a good side and a bad side. I don't know. John told me his glass door is absolutely perfect. What a remarkable thing. But glass doors can be just as dangerous. Social media, we've got to be careful because it again a given time, an irate associate can set up their own webpage and literally terrorize you and send out false warnings that you have no chance to defend yourself. So, we have to be able to become aware, all right, we're deep into the community, but we've got to become deeper in the community in order to be able to make absolutely certain that we can start, and we can increase recently, we may have to end up buying companies that have people and look at it from a totally different standpoint. But nothing's not on the table. Nothing at all. health care programs, babysitting programs, someone just told me today that 70% of the millenniums would like to go to work and bring their dog. I don't think we're going to go there. We might, I don't know. We might. But am I scaring yah? How many people Am I scaring? Alright, you don't have the impact of the critical number yet. Alright. So, the number to us is extraordinary critical. It's so ironic, again, that we've got to revamp our entire outlook in terms of people the environment, our buildings have got to be able to change, we got to make it more friendly than we've ever made it before. We got to make it more fun. We don't? Well, we only have one ping pong table and 20 other factories, maybe we got to get more ping pong tables, and look at the best practices of the Googles. And the people that are for some reason attracting, you know, this significant amount of people. Oh, yeah, we got employee ownership, I'll tell you, you're there for a long period of time you really make it but teaching a kid that it's all about long term patient capital, it's all about hard work. They just don't buy it in those early years. So we got to figure out how to communicate, how do we get to when we got to now onboarding programs, you know, our people are so mad at us in terms of the number of hours worked, we eventually had to go to them and say, Look, if you are that mad, go find somebody that we can hire, we've got to get everybody in the company focused on the critical number, because that's the purpose of the critical number. And if you're getting tired of me sitting there talking about the critical number, and I'm finally got my parallel process down. I'm explaining to you what it is and affects the long-term viability and safety of the company going forward, I am making absolutely certain that you've got the courage and the guts to do something about it, shredding it down into its most simplistic thing, looking under every single table that you possibly can seek answers to what I think is going to be a war on talent, or a war for talent. And we're all going to be competing against each other in a small labor pool. Right now, there are 6.3 million jobs open in the United States today. In less than 24 months, they're forecasting, they have to go to 8.5 million. In that 8.5 million 3.5 million are manufacturing jobs in the United States. We need to get a fraction of that in order to make absolutely certain that we can sustain the growth, have the opportunities and to be able to grab the brass ring. In conclusion, I will tell you what I just like my gut tells me today. Those of us that have the most outstanding workforces by the year 2020 will dominate your markets. The valuations of companies will change from not only multiples and earnings, book value, multiples strategic models to looking who has the most valuable assets. And that's people. So, if I've done my job here today, it's one to express to you the power to express to you, our critical number works. But more importantly, to understand that a critical number can actually bring everybody together and everybody can do something about it. This is just the beginning of all the things that we're doing now to retain to attract. We've now set some goals in terms of where we really need. We'll put incentive programs out there. We're actually up to now having a finder's fee per employee at 20 $500. It didn't sit too well. But if you told somebody that they could have a Saturday if we could get back to normal hours, that we are really doing everything we possibly can, and we need your help in order to attain it. You're understanding, okay, how you can do many, many things within one, one critical number, and solve so many problems at the same time. I don't think it's going to be that expensive. I mean, we'll match wages. All right, but we'll pass wages on to the marketplace. And what we know right now is that we will figure out what the compensation is. And compensation is basically based on any kind of an increase in productivity, and any increase in inflation. One of the worst things in our United States today is that we've only had a 1% improvement in terms of productivity. So, we have chances in terms of productivity, to require less people if we can figure out how to get much smarter in terms of the things we did. So let me listen leave me a one interesting quote, already said before, those of us that have the workforce, those of us that have the people will dominate their space in the next 24 months. Thank you.
Steve Baker 41:25
Let's keep the conversation going guys. Send us your stories, your best practices, your ideas, your challenges, your victories, your questions, and remember, you're not alone. This is capitalism at its best. Thanks for joining us. We will see you next time.
The "Change the Game" Podcast is produced by the Great Game of Business. To learn more, visit greatgame.com.
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