The Power of Purpose

Episode with guest: Clark Gey

President of Wayne Automatic Fire Sprinklers

(This episode was previously recorded at a GGOB Conference.)

Key Episode Take-Aways:

1. Fairness does not always mean equality. (click to jump to this topic below)  A strong commitment to fairness. And we got to where we pip every team member, on their critical number, something that they can impact. They have the ability to change. Tied every team member to their critical number. Let me talk about fairness and equality for a second. Fairness does not always mean equality. It is my belief when fairness and equality are confused, it breeds entitlement.

2. When all your employees have an ownership mentality, more ideas and better decisions are made. (click to jump to this topic below)  There's no middle. When you have, I'm telling you when you get an ownership mentality, they make better decisions than I do. I assure you; I hadn't set a budget in 12 years; they wouldn't want me setting a budget. I don't know what the hell, they know more about it than I do. They make better decisions than I do.

3. Empathy. Taking a step to the other side and realizing what others are doing to help make the company successful. (click to jump to this topic below)  This is taking when you get something that strong, bigger than yourself. It takes team building to the next level. Empathy and walk a mile. You've got to get your people out of that zone they're in and step over here and realize what somebody else is doing and how they work together. Every one of our team members walk in the shoes of somebody else for at least two days.

Continue scrolling to read the full episode transcription.

Announcer 0:03

Welcome to the "Change the Game" Podcast, where we share stories of open-book management and highlight capitalism at its best. Welcome to the "Change the Game" Podcast. This week we pull from the vault a moving presentation from Clark Gey. Clarke discusses how fairness and equality are not the same thing, why you should not read entitlements in your company, and the power of purpose.

Clark Gey 0:27

Wow. Good afternoon. Good morning. We have been involved in The Game for over 20 years, I'm going to tell you how much the inspiration of all of you that are playing The Game inspiration, the inspiration of The Game itself and inspiration of Jack, what kind of impact that you've had on us, business and personally. Got to find the button. Everything starts with a dream. One guy said my motivation was to be unique and fair find a way that team members could, would challenge themselves in ways they never thought possible and be rewarded beyond their wildest dreams. If you know anything at all about construction, you know, it's not fair. It's not easy. It's risky, unpredictable. And we're often required as lowly subcontractors working for GC to sign some pretty ugly contract language. For an industry average return for subcontractor in America is about 4.8%. A whole lot of risk not much return. When you start a company, you got to get pretty creative. So, you do things like you hire your 13-year-old son and teach him how to weld pipe. I wouldn't trade that for anything in the world. So, it rocked along, and nobody was happy. We had so we had this bonus plan and what happened you get to the end of the year, figure out how much money you had. And you try to figure out how to split all that up. First thing that happened, when you hand it out, he rips the envelope open, pulls a check out and if it wouldn't, more than last year, guess what? He's pissed. And then the next thing what happened? If it wasn't more than John's, he's pissed. And then we found Jack. So, we got our ass on a plane, and we flew to St. Louis, got all jacked up, we came back started doing the OBM and all of this stuff. And eventually it took time, but we got a managers ownership mentality. And eventually, we got them tied to a low base salary. Every manager we have makes $75,000 a year. They hadn't had a raise in eight or nine years. There's a couple of them here today. Guys, you know, you ain't going to get another one, sorry. But you know what, they don't care because they're tied to the bottom line. They know they get 10% of their department or their branch. We say there's no floor, no ceiling, I guess in actuality, probably is a floor because 10% off is not. But there's no cap can be as big as it can be. And we created owners with virtually limited risk. We thought we had this thing figured out man. We had raised metrics where every metric you could manage your business with were hidden numbers larger than anything we'd ever dreamed possible. And then we ran into a wall, hit this thing I call the messy middle. And things started happening to get tough to deal with like our CFO that had been with us for 20 years great guy, we had to make a tough decision. He wouldn't get his arms around The Game. We knew it was work, we knew is the right thing to do and make a tough decision. And then we started dealing with stuff like cash flow DSOs retainage. See when we work for general contractor, they hold 10% of our money until the job is done. And that's way, way there they got the last tulip planted. We're installing fire sprinklers. We've been done for six, eight months. And we tried to hire manage that it got messy, and we kept trying different things. Then we had our field foreman. See our foreman in the field 80% of our workforce is in the field. So, we got a foreman in the field. And he came to me one day and he goes Look man, I appreciate all this opportunity you're doing. See, because you give me 50% of the labor savings on my job and I only make 18 bucks an hour but and I just got a $28,000 bonus. You have changed my frickin life. But I don't understand something, I go what's that? He goes well the salesman that sold the job see another salesman just sold this job and he skinnied up the estimate sheet and got a big old fat commission at the bottom. He's running down the road happy as hell. And I'm stuck with that job for the next nine months. I got no chance of making anything. I go wow, this is messy. So, we had to deal with that stuff. And he said, Clark, well how'd you fix it? I don't know, it was a lot of trial and error, and persistence.

1. Fairness does not always mean equality.

A strong commitment to fairness. And we got to where we pip every team member, on their critical number, something that they can impact. They have the ability to change. Tied every team member to their critical number. Let me talk about fairness and equality for a second. Fairness does not always mean equality. It is my belief when fairness and equality are confused, it breeds entitlement. Let me give you an example--As two people that mean the most in my life. My daughter, Valerie, sitting next to me, and my son that's sitting there underneath that umbrella, Justin. Both of them work for the company. I couldn't be any more prouder than them. And tell you something about Justin. See, nine years ago, he jumped off a boat and shallow water, snapped his C 3, 4, 5. Justin will never walk Planet Earth again. Done. Justin will never be able to pick up this clicker with his fingers. He can't use his fingers like you and I, as quadriplegic. Can't feel anything from his nipples down. It will never change. Why am I telling you this? Because it is my strong belief, that is would have been very easy for Justin to become so entitled that he couldn't function. But because he grew up, at Wayne Automatic and grew up in an environment that had open-book management. And because there was transparency, I believe, with everything I am that that kept him from being entitled. Let me show you what's really cool. He's got a truck that's got a six-inch lift on it. And I don't know there's, I'm sure there's somebody out here that it's aware of what's available with accessible vehicles and things like that. Nobody makes a damn truck that's got a six-inch lift that'll drop a chair down 32 inches where he can transfer over and get in, get in there and drive it. He said dad, I'm not going to get in a minivan and ain't happening. I go well, son, how you how are we going to get you up in that truck? He goes I don't know. He built the seat to get his ass from that wheelchair up in that truck. I'm sure Ford will not approve of what's happening. But it works. He bought a John Deere tractor. He said I want to be able to mow my grass. I don't want somebody mowing my grass. I go how you going to get your ass in there? He goes I don't know, but I'm going to figure it out. It took him nine months to figure out how to build that seat so he could transfer and lift him up and sit him in that tractor. He pisses me off because he can weld better than I can. And I don't know how he does it because he ain't got any fingers. He can't use them. But he's not entitled. And I think that's a direct result of open-book management. Moving on, return on investment. So, what's the big deal, Clark? What's the ROI? Let me tell you what I think some huge ROIs are for us at Wayne Automatic. Seven out of eight of our operation managers might have a high school diploma. Opportunities beyond your wildest dreams. Randall Drawdy, he grew up on a farm in Groveland, Florida. He was my helper 36 years ago, went through the field went through all the ranks. Randall is now one of our top managers, his base $75,000, just like everybody else, everybody knows that they all know what the base is. Last year. He's tied to 10% of the bottom line, his pip was $250,000. Opportunities beyond your wildest dreams. Danny Driggers, one of the best, in my opinion best, we have a salesman here today don't take this wrong. My opinion, one of the best sales guys we've had in our history, became vice president. At 50 years of, at the age of 50 years old, he couldn't read. He learned how to do it. He's still with us not as vice president. He's still, he's with us as a salesman because he's semi-retired, we like to say, a little bit of Danny's a whole lot better than no Danny. ROI, no middle management, there's 16 managers that work directly for me.

2. When all your employees have an ownership mentality, more ideas and better decisions are made.

There's no middle. When you have, I'm telling you when you get an ownership mentality, they make better decisions than I do. I assure you; I hadn't set a budget in 12 years; they wouldn't want me setting a budget. I don't know what the hell, they know more about it than I do. They make better decisions than I do. We got this joke that goes around the office. Somebody comes in my office; they call it my magic quarter. They come in and say, hey, we got this issue or something. What do you think we ought to do? I don't know. They walked out. And one of them caught me. He walked out the door he was peeking back. I pulled the drawer open and pulled what they think is my magic quarter, but it's actually a coin that was handed to me by someone very special a Navy SEAL. You know what the motto of Navy SEALs is Fortune Favors the bold. I flip that heads or tails; they make better decisions than I do. They own it. In 2009 ROI, that's why I call that everybody knows what happened in 2009. In 2008, money was falling off trees. We were doing $94 million dollars in revenue more than any time in our history. Overnight went from $94 million down to $48 million. Over 600 team members directly to 250. We had to get rid of over 260 vehicles. This is what happened. Randall Draughty along with every other team member, not one of them, came up with their hand out. Because Randall Draughty in 2008, made $75,000 base. But he also made about $300,000 in pip. Maybe I need to explain what pip is. We don't call bonuses. We used to charge people a quarter when they said the word bonus, it's not a bonus, it's a pip- performance incentive pay. Randall made over $300,000 in 2008, when 2009 hit, he didn't come with his hand out because he knew and knew the numbers. We made, it allowed us to make quick decisions and we remained in the black, even though it was our worst year in our company history. Let me run through some numbers 401k match. We match team members 401k dollar for dollar up to 6% if we hit our budget, not our revenue, we don't care about how much we do. It's how much is leftover. If we hit our profit budget for the year, we match it 100%. So, on last three years, we paid out $3.7 million 401K. Performance incentive plan, pips. This year, through June we paid out $3.5 million in pips. We're going to do that again at the end of the year. We'll pay out over $7 million in pips this year. Revenue won't buy groceries. Can't do anything with it. Five out of the last six years, we have grown our bottom line faster than the top. It's the bottom line is more important than the top. Everybody knows it. Everybody's tied to it. Comparing 2009 income statement, I said in 2009, we were still in the black 3.9% pre-tax. We didn't pay any pips out because there we have a threshold; the company still has to remain strong. Nobody got a pip. 2016 We did $95 million last year, we had a pre-tax of 21.8% when the industry average is 4.8. Now that's pre-tax pre-pip we pay. You take the seven and a half million that we paid in pips still to 14 and a half percent pretax pretty strong. That is what [applause] that's the power of The Game and open book. Now let me shift gears real quick. I know we only have a few minutes left. Let me wrap it up with something that is really powerful. Power of purpose. No doubt if you read books, you have seen some of these books written by doctors Kevin and Jackie Freiberg. I read the book Cause. I go there's something there that it's us. I don't know what it is, there's something there. I don't know how to do this but there's something about it. So, I got my ass on a plane again and I flew out to California. I want to meet Kevin Freiburg, and I met him. I go Kevin, man, I read your book. I need you to help me. He goes, well, let me tell you something. He said, well, I like you, Clark. You're a nice guy. But see, Jackie, my wife and I, we just we decided a long time ago that we're not going to work with companies that suck. Well, Kevin, tell you what. We don't hire people who suck because our employee handbook says that on page three, we don't hire people who suck. So, what do you think about that? He goes well Clark, what do you do for a living? I go I install fire sprinklers. He goes, you suck. I go what? He goes that's why you suck. Well, how does that make me suck? He goes look, start talking about this stuff like noble heroic cause empathy and purpose and being part of something bigger than yourself. And I'm going Yeah, that sounds great, Kevin. Sounds great. Well, how, to what to do with that? Man, we just subcontractors. He goes, what is your noble heroic cause? And I go man, we are just humble guys that install sprinkler systems that nobody wants. Not one person has called any of our six branch offices in the last 10 years and called up said hey, I'm afraid my baby's going to die tonight in a fire, will you come sprinkle my house? It don't happen. And that's what I'm telling Kevin. And he goes oh BS, he said find your cause. Okay. So, let me tell you something about fire facts before I talk about our cause. 75% of firefighters in America are volunteer that don't make them bad people. Just means they're not full time Fire Stations. They might not have the funding. Seven people a day lose their lives in a home fire on average. I don't know how long you've been here. But if you've been here for three days, 21 people lost their lives in a home fire. More lives are lost due to fire than all natural disasters combined. Average response time I don't care whether you're a volunteer firefighter or a career firefighter. Eight minutes. That's not eight minutes from the time that candle lights that tablecloth on fire. No, that's eight minutes from the time somebody gets on the horn and calls 911 And they dispatch it over to the fire station you finally get a hold of somebody, and he slides his ass down the pole jumps in that red truck to come save you. Eight minutes, not real long, right? Just eight minutes. Tell you what happens in three, flashover. Flashover is anything that can burn, will burn and does burn in less than three minutes within a compartment. That means in this conference room if there was a fire to start, you're like well, I can get my ass out of here. Anybody ever heard of the station nightclub fire? Over 100 people died. Flashover occurred; they didn't make it out. I talked to Rob Finney. This is hard. His fiancée, they were they're standing three feet from the stage listening to who? The band Great White. There you go. The fire broke out. He saw an exit out the back. Security wouldn't let him go out the back. He grabbed his wife to go out the front door. By the time they got there, there was a wall of bodies 10 foot high. The last he felt of his fiancée was the skin pulling off her wrist. Never saw her again. Flashover is deadly. I'm telling you the best firefighting equipment on planet Earth known to man with a put on the best trained firefighter cannot survive flashover when that occurs. Dead before they get to you. That's fact. I got a one-minute clip. And I know I'm running a little over time and I'm about to wrap it up. It's going to be hard to listen to but it's real.

Announcer 19:32

Ma'am, can you hear me? Yes, we have the addresses. Anybody in the house? Yes, sir. Two children and my mother. How old is your mom? Trapped upstairs. Throw this at the window. Throw this at the window. Are they awake, do you know? They're trapped inside. Do you know if they're awake? They're screaming. Just break the window. I don't care, break the window. There's no ladder are anything that they can jump down to? No, they're locked in. They're locked inside. And you do see flames visible ma'am? The entire house is on fire, I can see flames. They're trapped. There's only one way out and it's on fire. Okay, I heard somebody trying to break the window. Is there anything that can break the window? We're trying but there's no way to break it. Okay, and this is your house, correct? Yes. How old are the kids? Seven and five.

Clark Gey 20:39

That's the last time mom's voice was ever heard from or her two children. See, that sucks. That sucks. You know why? Because if there would have been a fire sprinkler system installed in that house, one fire sprinkler would have activated. Extinguish that fire. Mom and two kids would have been alive today. Not every sprinkler in the house. It's not like the movies when you see all that stuff and everything floods. No, just one sprinkler putting out 12 gallons a minute. That's it. Done. Boom. No bubbles, no troubles. Nobody had to die. That's why it sucks. We got the answer. And I don't mean Clark Gey. I don't mean Wayne Gey, I don’t mean Wayne Automatic Fire sprinkler. We didn't come up with this, started in 1800s. And people are still frickin dying. Why? It's stupid. Our question is, if not now, when? If not us, who? That's our heroic cause. Kevin says man, you got to come up with a short word. Something to remember, something easy. So, we did a contest. We had that contest, and this is what we came up with--Minutes Matter that right there is our heroic cause--Minutes Matter. Because families and dreams become reality, become memories in three minutes. Minutes Matter. It meant so much that the founder put his first ink on his shoulder at age of 74 years old. What's really cool is we got a temporary tattoo contest going on right now. We got team members, kids putting temporary tattoos on them and running around and doing stuff like this right here. Rob Bell worked with us for over 10 years, or still works with has been with us for over 10 years. His three daughters, four days ago, had a fire in their neighborhood. They stick their tattoos on there in front of that house with Minutes Matter. I don't know. I haven't been there to know whether anybody died in that house. And I'm not advocating we be ugly. But I'm just telling you. How cool is it when kids start telling their dad and their mom that you're heroes. They're heroes. You see what's going on here? See what's happening? We hand out these stickers that I saved the life where these fires save hardhats. As of two days ago, there were 63 activations of a one sprinkler head that extinguish a fire from systems that we installed just this year. I don't know how many people how many lives have been saved, but it was 63o them, just that we know. We don't get a call every time it happens. They might call another sprinkler contractor to come out there and just replace the head. It's not a big deal to change the head when one activates. 63 of them. They get a sticker every time that happens. Every team member that was involved in installing that system. Doesn't matter whether you're a bean counter in accounting, or you're a guy hanging in the field or sales guy that sells it or a designer that did it. Everybody gets recognized. We said hey, let's get rid of these plain looking company trucks, right? You got a bunch of words on them. We went out and got these bad trucks. We got them jacked up got, Minutes Matter on it. Let me tell you what happens when Reggie right there pulls into the gas station to fill his truck up. He can't get out of the truck without somebody going on man where the hell do you, what's Minutes Matter? Opportunity. Huge. And you know how that makes Reggie feel. Hero baby. We've always had enhanced team building. I'm just about to wrap up. Please don't hook me off the stage.

3. Empathy. Taking a step to the other side and realizing what others are doing to help make the company successful. 

This is taking when you get something that strong, bigger than yourself. It takes team building to the next level. Empathy and walk a mile. You've got to get your people out of that zone they're in and step over here and realize what somebody else is doing and how they work together. Every one of our team members walk in the shoes of somebody else for at least two days. Brandon, he goes out in the field he hangs pipe for two days. He ain't just selling anymore, now he goes oh man, this is hard stuff. Makes it difference. I'm going to wrap up a final thought before I say thank you to Jack, The Game and all of you that have inspired us. My belief that OBM engages the head purpose and cause engages the heart. You put those two together, unstoppable. Thank you

Announcer 25:27

The "Change the Game" Podcast is produced by the Great Game of Business. To learn more, visit greatgame.com