Capitalism at Its Best

Change the Game™ Podcast

ESOP Roundtable 4

Posted by The Great Game™ Team on Dec 21, 2021 10:00:00 AM
This episode was recorded at a live roundtable event discussing the benefits and pitfalls of being an ESOP company. It is not required to be an ESOP company to enjoy the benefits of the Great Game of Businesses practice and principles, but they definitely pair well together.

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ESOP Roundtable 4-1

 

Victor Aspengren, Perry Schisel, and Jon Stiles

(This episode was recorded in December of 2021.)

 

Key Episode Take-Aways:

1. Building a business of businesspeople. (click to jump to this topic below)  I really love that the concept of building a business businesspeople I do I love it, I believe it and I want that opportunity for everyone here. Some people just don't want it. I just want to be an electrician, why can't I just come to work and be an electrician? Well, you can, you know, and then you just got to take a little different tact with them, to get them to kind of, you know, ease them into the business side of it. But some people just love it. Some people say yes, teach me. I mean, this is great. You know, instead of being an entrepreneur and taking all the risks, you can be an intrapreneur inside of a business and still have that,

2. You don't know what you don't know. Employees don't know until you give them the experience. (click to jump to this topic below)  And so, when an issue would come up that affected the team, they go, oh, it's okay, whoever the lead was, we understand we get it, we walked in those shoes for three months. And now we understand what it is. So, it just lowered all of the tension. Because they had an opportunity to experience which kind of what you said Perry, people don't know until you can give them the experience. And if you can do it in a safe way, it does a lot to build up that ownership mindset because they tried it and they came to their own realization, nobody said that they were bad at it.

3. When more employees understand the numbers, the more ideas you have to help improve the numbers. (click to jump to this topic below)  So, that whole mentality of teaching them the numbers and understanding the profitability and then go back to our thing about trust and all of that. I mean, we had a celebration you know. We gave everybody like chamber dollars instead of cash, you know, or the chamber bucks to the local community. We had a big celebration, and neither one of those people want an anything extra, but recognition and, and everybody's like, well, you guys, when you're going to do that again, do that again sometimes so we can all get that $100 in chamber bucks. But it was a great example at big money, big money that changed, definitely changed our value in our ESOP. I'll tell you that added 60,000 profits to our bottom line was a was not a small number at that time.

 

Continue scrolling to read the full episode transcription.


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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 was recorded at a live roundtable event discussing the benefits and pitfalls of being an ESOP company. It is not required to be an ESOP company to enjoy the benefits of the Great Game of Businesses practice the principles, but they definitely pair well together. For more information on ESOP's, download our new white paper, five rules for building a true ownership culture and find an employee-owned company at greatgame.com/ownershipculture.

Victor Aspengren  1:27

Welcome, everyone to the Great Game of Business ESOP Roundtable number four. My name is Victor Aspengren. I've been the host of these four roundtables that we've had here over the last few months. And today we're talking about Employee Ownership mindset. We have a couple of great stories and perspectives from Jon Stiles and Perry Schisel. So, with that, before I say anything more, I'm going to let these guys just kind of introduce themselves, tell them a little bit about their company, when they started practicing the game, and also when they may have implemented their ESOP and at what stage they're at. So, with that, Perry, would you like to go first and do an introduction and kind of paint the picture of your company and where you guys are at?

Perry Schisel  2:15  

Sure, sorry, Perry Schisel, president and CEO of suburban enterprises. We've been around for since about 1960. And we started our ESOP in 1999. we are a minority ESOP we're three 5% employee owned. And we really didn't start, I guess, practicing the Great Game of Business. We started out until about assorted about 2018. Started playing the game seriously. We had tried it back in 99. When we became an ESOP, and it just didn't, we just didn't stick with it back then. But, you know, we got back into it in 2018. And we've been playing it ever since. So.

Victor Aspengren  2:54  

Great and how many people do you have within your company? Can I ask, 

Perry Schisel  2:58  

I'd say around 225. 

Victor Aspengren  3:00  

And you're in multiple locations or one location, 

Perry Schisel  3:03  

Remote location. 

Victor Aspengren  3:04  

Okay, super, super. Jon.

Jon Stiles  3:08  

My name is Jon Stiles. I'm the President and CEO of the Party Source in Bellevue, Kentucky. We tell people that we're America's largest party superstore. So, 100,000 square foot alcohol beverage store on the banks of the Ohio River in Bellevue, Kentucky. We have 120 employees. We became an 100%. ESOP back in 2014. We had eight years to pay off a company. And we did it 18 months early. We've made attempts to play the game before, but I tried to do it on my own. And it's just too much to you know, do my job and to do the buying that I do, and to try to teach what really needs to be taught. So, we're kind of at the beginning of our Great Game Plan. We've signed on for a full coaching package and we start in January. Okay.

Victor Aspengren  4:05  

So just too well, I'll give a little history here. Like I said, I've been doing these last four roundtables for the Great Game of Business. I'm a former coach, number of years ago, I'm a recovering CEO. I'm a recovering inventory warehouse manager sales and marketing manager and HR manager. So, I've held about every position you can hold within a company. But I've also worked with RSM McGladrey on ESOP administration on that side as well as an investment bank out of Chicago Prairie Capital Advisors, where I was actually doing transactions and deals. So, I'm a bit of a hybrid. I've lived both sides of it, but I am totally a corporate person at heart living it is a whole lot different than advising to it when you consider employee ownership ESOP and Great Game of Business. So, the first thing I just kind of want to make a statement in regard to this Employee Ownership mindset because both Have you guys are ESOP's so let me ask you even back in 1999, for you, Perry and Jon 14, do you think you had any kind of an Employee Ownership mindset before you actually implemented an ESOP? Either one of you?

Perry Schisel  5:19  

I would say, you know, I would say we didn't have that mindset, you know, what? Like, we're not as far along as I would say, like we are now. You know what I mean? But yeah, we I would say, no, we didn't have that.

Victor Aspengren  5:31  

That was not part of your culture. Pre ESOP. Okay. Now, what about you, Jon?

Jon Stiles  5:36  

I think we had a few individuals within the company that had an Ownership mindset. I mean, that was always the approach that I took as an employee of the Party Source and with the previous owner, was that it was my store. And I'm sure that there were a couple other few other employees that kind of, you know, approach things the same way. But, you know, on a widespread basis, the answer would be no.

Victor Aspengren  6:00  

Yeah. Okay. And the reason I asked that is, there's a myth out there that some people, a lot of people, and they even promoted that once you put in an ESOP everybody just miraculously going to have this Employee Ownership mindset. And so, I wanted to say, well, you guys pre did, you didn't really have it. And the ESOP my experiences, the ESOP, in and of itself, does not create Employee Ownership mindset, because it's a qualified retirement plan. And yes, you get some equity from it. But the ESOP in there, especially in the early stages, does not trigger something up here to where people go, Oh, we're an ESOP. And now I've got this Employee Ownership mindset. And then the other thing that I would just say, is doing this for over 20, some years. 1999 is when I got exposed to ESOP's. If I go on, I say, how many of you have ever been an owner of a business? You know, the answer is not very many of us. But for whatever reason, in the ESOP world, people put in an ESOP, and then they think, well, everybody understands. It's like, well, they have not practiced it. They don't know what it means to be an owner. So that's the ESOP side, the Employee Ownership mindset, that's a wholly different thing. And I think that's where the practicing the Great Game of Business and turning to teach the financials is a step towards building that Employee Ownership mindset. Because when you say you're an owner, that's a powerful word, and everybody views ownership in a different way. But the one thing I will say, for the audience, and Perry and Jon, you guys chime in, is you put in the ESOP, and you start calling people employee owner. And when you tell somebody, I'm an owner, you know, these triggers go on, it's like, well, if I own it, that means I should know everything. And I should be able to give, make decisions about everything, and I can do whatever I want to with it. And it can almost create a little bit of mayhem, because the employee ownership is not necessarily defined. So, I welcome any comments you guys might have on what I just said, right there.

Jon Stiles  8:11  

I definitely think that if you don't define or help to educate employees on what being an employee owner is, then everyone develops their own perception of what it means to be an employee owner. And, you know, a lot of times it doesn't mean that they know everything, but a lot of times it does mean that, you know, they think they can make, you know, all the decisions, and they want to make all the decisions. And frankly, I want them to get to that point. That's kind of why we're starting into this, but you know, it, it, if you don't define it, if you don't educate it, then it just goes in a lot of different directions. And you have, in our case, 100 different employers with, you know, a lot of different ideas on what it means to be an employee owner.

Perry Schisel  8:56  

You know, I think there's a there's probably an unfair expectation, once you become an ESOP, and you're calling your team members, employee owners. When if you're an owner, and I've been on both sides of the equation, I've been an employee owner in our ESOP, and then I bought the other piece of the company. Right? So, I thought I was an employee owner, I thought I was an owner. Right when I was in the ESOP. I had no idea what it meant to be an owner, once you buy the company and you mortgage your house or you go into debt, you know what I mean? And you have sleepless nights about payroll and everything else. I mean, that's kind of true ownership is that you're living the business. Right? When you're an employee owner, it just isn't that intense. Right, you know, the stock, you didn't have to put money in to get stock. Right. The stock is being, you know, forwarded on to you. So, I think that's there's an unfair expectation, oh, you're an owner and I'll think like an owner. Well, they didn't decide to be an owner. They just became an owner. You know, maybe they don't They want to be in order, right? You know, it's like over the books and show them the numbers. They don't even know what those numbers mean. Right? So, I think you got to work with them and ease them into this and expose them. Like you said, Victor, you know, and slowly bringing them along, you're going to have your A players are going to jump on it and say, give me all the financials, I want to know, income statement, balance sheet cash flow, what does all that mean? I want to learn, and they're going to run with it, and then you're going to have the bring the rest on a little bit slower. You know, and but that's how it works.

Jon Stiles  10:27  

Yeah. And even for myself, you know, early on through the first two, maybe three years of our ESOP, I wasn't sure I wanted to be an employee owner. You know there were times when I really wish that you know, the previous owner hadn't sold to the employees, that I was still just the gentleman during that there was someone there above me, that was responsible for all these things. And that had to worry about making payroll and getting all the bills paid and payroll and taxes. You know, a few years, I would have traded it, you know, we've gotten to the point in time where now, you know, I'm comfortable. But as Perry said there's a lot of sleepless nights and that weight of true ownership does weigh on your shoulders.

Victor Aspengren  11:17  

Yeah. Now, Jon, you made up a good point there on both of you do you have? Do you have, quote, employee ownership kind of define? What does that mean, when I'm acting like an employee owner? Do you have? Do you have some guidelines or values or statements around what that means within your company?

Jon Stiles  11:35  

And we haven't, we haven't done anything to define that. I think that's part of our current problem is, uh, I'm not sure you can just define it for them, I think you have to  help teach them exactly what it means you can't just tell them, okay, this is how you be an employee owner, because I don't think they were going to buy into it that way. You know, they've got to be taught what ownership means. And maybe even on their own, they've got to, as you guys have said, in Great Game of Business, you know, you own what you create, you know, you have to help them create, what they will know, it is to be an owner.

Perry Schisel  12:16  

Right, you know, they're not going to be able to make some of the ownership decisions that people think of, well, I'm an owner, like you said, Victor, I'm an owner, I get to make these decisions now. Well, that's not how you run the business. And that's not how it works. We're trying to define that ownership as it doesn't matter what position you're in whatever position you're in anywhere in the company, you have a line of sight to our critical number. And you can affect our critical number in a positive direction, which brings more value to our company, which in turn makes us a more valuable company. That's how you help create more value. Right? Your responsibility is such in the business, right? So, if you're maxing out your contribution, and what you can do for to help drive our business, you're going to help drive the business, you know, drive the value of the business, which is going to increase the stock price. You know, and that's kind of where we've settled or for the time being, at least trying to explain, here's how you can affect our stock price as an employee owner.

Victor Aspengren  13:11  

Yeah. And it's interesting, because you guys are not alone in this. This has been going on. And the whole time I've been here I asked people have you defined what ownership means? And the reason I think that that's important is because it gives you a framework or a common ground of for everybody to call each other out. Are we acting like an employee owner? And we went through that process, as Steve Baker says, and Rich and you know, the two days on all the seminars, people support what they helped create. And in the first ESOP I was in, we, through our ESOP committee, we surveyed, and the people came up with the behaviors, we made it specific behaviors, so we could call each other out when we weren't acting like it. And the people created the definition of what employee ownership meant within our company. And then we said we all agreed to it and leadership team, we said, we always reserve the right to override anything because that's what leadership's about. But the people came up with it. It was fantastic. You know, we had a definition it was called owner O.W.N.E.R own myself willing to change need humor and education earn my keep and respect all people and that came from our folks. And then you know, people's Be careful which thing you got, but they say Victor, I You're not being very willing to change, and I go, Okay, you're right. So, you can go through a full process. And I think it is healthy because it engages people, you can get them in there. And as long as leadership can buy into what they come up with, but I am a believer that people will come up with pretty good stuff overall. It's not going to be crazy off the wall stuff. And then the other basic definition that I tell people is, if you don't have a define what I would say to people, I'd say, when you're about ready to make a decision Whatever that decision is with a client, with a vendor with a fellow employee owner, and you're questioning, here's how, you know, if you're making the right decision, if you're willing to get up in front of everybody in a company meeting, and defend the decision that you just made it that scares the bejesus out of you, then you might want to step back, you're probably not making an employee ownership decision. And check it out. Now, if you feel confident, you get up there and justify that in front of everybody, then you're probably on the right path. So, it's because that getting up in front of everybody that's being an owner, you know, if you go back to the old ownership, when one person owner two, they get up in front of everybody all the time? Well, if you're an owner, that means you got to talk to everybody about what you just did. So, there's a short and sweet way to kind of define ownership behavior that when I used to say that people go, are you kidding me? I'm like, well, maybe you want to think about it more? Well, maybe I need to Yeah, I don't want to do something like that.

Perry Schisel  16:02  

Yeah, we try to give the recognition as much as possible, we recognize somebody is stepping up, right and doing more than what they really need to, right, because that's another form of ownership to, you know, we always say the best ability is availability, who's raising your hand when we have an initiative or a mini game or something that's going on? That really, you know, this person out of the blue says, I can help with that. Now, I'll be on that committee, I'll do that, you know, or just bringing issues or possible improvements for our business in different departments. Hey, what if we tried this? What if we tried that? You know, so we publicly thank them. We do shout outs at our huddles, you know, and say that, you know, that's our employee ownership culture. You know, this is what we need. We need more people speaking up and caring more about the business. That's employee owner.

Victor Aspengren  16:51  

So, I'll ask both of you this, if you could go back, pre-ESOP. Would you look at things now, if you could have practiced the game and really instituted that practice would have it made it easier moving into an ESOP, and people would have had a greater appreciation for what they got by becoming an ESOP?

Jon Stiles  17:12  

Yeah, my answer is absolutely. Matter of fact, I was listening to a podcast one of your podcasts a few weeks ago, and it was Steve Baker said before you make them owners make them businesspeople. And you know, what, what happened with us was, you know, the previous owner, you know, we had no idea he was pursuing an ESOP until two months before it was going to be finalized. And you know, that's when he had a meeting with everybody. And it was pretty much just a rah, rah meeting, hey, you're all going to be employee owners. This is going to be fantastic for you. But it was never defined. And, you know, we should have been involved from the moment he decided he needed he wanted needed to do that. And we should have been working on our education and our culture. And, and then on March 20, or March of 2014, when we became an ESOP, we'd have been so much further along. But you know, employees should have been part of that decision. And education should have started right, then.

Perry Schisel  18:14  

I agree, Jon, it was kind of mass confusion. When we kicked off in 99. Of what is this? How does it work? What do you mean, I'm an owner? What decisions do I get to make? You know, I'm a stockholder. It just, it was more confusing than one of them was anything else? Well, you know, I mean,

Jon Stiles 18:33  

You know, for leadership, you know, I was running, I was running the company for years, even for the previous owner. And the day we became an ESOP. I knew how to run the company, but I had no idea how to run an ESOP. And it's an entirely different animal. And there was no one to teach me I had to, I had to learn on the fly, you know, researching every single piece of information, I could try to figure things out and making mistakes and try not to make them twice. It's been it's difficult, and it really would have been much better to, to have had a year of, or even six months of preparation for it.

Perry Schisel  19:10  

Yeah,

1. Building a business of businesspeople.

I really love that the concept of building a business businesspeople I do I love it, I believe it and I want that opportunity for everyone here. Some people just don't want it. I just want to be an electrician, why can't I just come to work and be an electrician? Well, you can, you know, and then you just got to take a little different tact with them, to get them to kind of, you know, ease them into the business side of it. But some people just love it. Some people say yes, teach me. I mean, this is great. You know, instead of being an entrepreneur and taking all the risks, you can be an intrapreneur inside of a business and still have that, you know, like curiosity to try new things and help grow the business or help improve the business. And it's kind of an it's a safer way to look at it for a lot of people and that's being a businessperson. And there's people I love that say

Jon Stiles 20:01

You know, where I'm at right now is, I'm beginning on my own personal transition. And I've been with the company 30 years, and I see retirement out there on the horizon, four or five years down the road. So, in a way, I'm transferring my ownership. And in so many ways, you know, we're wonderfully successful, we've paid off our ESOP early, our sales have gone up 35%. Since 2014, share prices tripled. We're completely debt free, wages are up, benefits are up, bonus program instituted last year, or 2020, we doubled it for this year, we're going to double it again. You know, but it's still, you just because you do all that doesn't mean that people are grasping the true ownership thing. And, frankly, I don't want them to miss out on that. Because that's, really a powerful thing for those people. And it'll be, it won't be everybody, you're right, Perry, but, you know, there's a lot of people that will grasp it, and I think for the company to really be everything that it can be, those people need the opportunity they need, it's our responsibility, it's my responsibility to make sure that they have a chance to get educated, and that they have a chance to, you know, steal the line from the army be all they can be, and to unlock their potential. And, you know, that's why I'm doing this is because I want them to have the chance to do this and to really run a great company for years and years after I've left it.

Perry Schisel 21:37

Yeah, I guess that's basically, what I'm saying is don't get discouraged that not everybody is just jumping in going, yeah, teach me I want to be a businessperson. You know, it's okay. It is I mean; you're going to have more than not wanting to learn more, learn more about the numbers and understand how to how to drive the business and get the results. You know, it's just the way it is. But don't get discouraged about it either.

Victor Aspengren 22:03

Well, I'm glad you guys are two more points of data because I anymore, maybe it's just because I'm getting older and, you know, finicky and grouchy or whatever. But I just tell everybody, if you're going to become an ESOP, if you're not practicing open book management, Great Game of Business, you're fooling yourself, because you've missed a golden opportunity to just ramp up the success of the company once you become an ESOP, because I live that we had a company that did not share anything we put in the ESOP. The ESOP in and of itself didn't really do anything. It's when we implemented a great game of business, and we did our own kind of version of it. We didn't have a coach. But when we started sharing the numbers, we started putting cash in the hand, based on what we did, you know, it's self-funding. So, in a way, you're starting to teach ownership, it's like what we can't pay a bonus. Because we used to get a bonus, the owners would give everybody $300 Every year, good, bad or indifferent. Well, that's not ownership behavior. That's entitlement behavior, that where we came from, and then when we became an ESOP, and I became the CEO, that's going away, and everybody's like, oh, my God, you're taking away our 300 Bonus, I'm like, well, we're not going to pay a bonus if we don't have the money to pay you. So, then we base it on performance and opening the books. And we actually, we surpassed it the first year, I think we gave people $800. Oh, and we gave ourselves out, like we said, well, if we don't hit it this year, we'll still give everybody $100. But after that, it's zero. Unless we hit our goals, it's zero. And so, I think that practicing the game, and I'm glad you both said that. So, for the audience out there, if you're not practicing the game, or if you're considering an ESOP. implement that and it's not just practicing, it's also doing well, because both of you said you tried it, it didn't go so well, for a variety of different reasons. I think that's where people struggle, because opening the books is kind of a baseline of ownership. But it's also a huge indication of trust. So, if you say to somebody, hey, you're an employee owner, and you don't share numbers, however you want to share him, I'm not saying you got to share wages and all of that, but you're not sharing the success, well, then it's kind of like you're talking out of both sides of your mouth will act like an owner, but I'm not going to share any numbers with you. And it's supposed to all come together and people should appreciate the ESOP which they don't have to put a dime into. And then they wonder why it doesn't go so well. So, I'm glad you guys said that. So out there in the audience. I mean, it doesn't have to be the perfect model. You know, Jon, you said you tried to self-implement, and it didn't go so well the first time around, because one you said you didn't know ESOP's so there's learning curve on ESOP, and to your too daggone busy just running the business to make sure you were doing what you needed to do to have a successful business.

Jon Stiles 25:09

Yeah, too much time working in the business, not enough time to be able to work on the business. And, and, you know, frankly, it was a tragic mistake that I made seven years ago, we would be such a better company, if I'd have figured out that I couldn't do everything and asked for help. But it didn't work that way. You know, I had, you know, talked with the previous owner about open book management after attending Zingerman's seminar. And, you know, I was told no, and I understand it was his business. But, you know, ultimately, times, you know, closely held family on businesses don't open the books, most likely because, you know, there's some secrets there and things that they don't want to share. So that was his call. But when we came became an ESOP. I mean, I wanted to do that I want the books. Honestly, I had to spend a year or so kind of eliminating some of those secrets. Because I never wanted a situation where an employee came up to me and said, hey, what's this line on the balance sheet mean? And I want to not be able to tell them the truth. I mean, you know, if you got to do this, you have to do it, you have to be truthful. And as you say, you know, we wouldn't share salaries and wages. But other than that, I want to open it all. I want them to see the good and the bad. As a matter of fact, and we talked about this, you know, I'll know that they've successfully become employee owners when they lose as much sleep over things as I do.

Victor Aspengren 26:40

That's true ownership. That's right. When they're stressed. They I said the same thing back in my day, Jon, yes. With everybody. When we went on our journey, I said, if we're going to be owners, yeah, we're going to celebrate, but boy, when it's stressful ain't going to be the only one stressing out.

Perry Schisel 26:59

The first year we played, we rolled this thing out, right, we tried doing it ourselves, which was a huge mistake. I mean, just developing the scoreboard and how to put that together and, to learn forecasting was incredibly hard by ourselves. And we ended up pulling in a coach. And we rolled it out with a bonus plan, you know, just verbatim the way the Great Game teaches it. And we missed the first quarter bonus. And everybody sees, this is a bunch of, you know, this isn't going to work. This is terrible. This is all a bunch of you know, smoke and mirrors. And then we hit I don't know, I was level three or something bonus, the second quarter. And here, what we did is we printed out checks, and we had a picnic. And we ran around and handed people their bonus checks and said, Congratulations, you earned it. Right. And it was so cool to be able to do that, you know, to kind of kickstart our, Great Game, you know as we were instituting it, and just to see the look on their faces going, oh, wow, this does work. This is real. Yes. So, it was pretty rewarding to be able to do that with everybody.

Victor Aspengren 28:06

Well, the other thing, I would just say, you know, for the audience, you know, Great Game of Business, you know, the vast majority of the practitioners are not employee-owned companies, you know, they're just the typical ownership structure. It's one or two people are a family or a small group of people. But they create that employee ownership mentality. And the other thing is the capacity is something that I think everybody, Miss judges on what it takes to open the books, because when you open the books, there's a lot of explaining to do, because, as we all know, not everybody understands what a profit loss statement, you know, an income statement is, or balance sheet or let alone how do you determine value? Well, that's a process. And there's, you have to be able to answer the questions back in the day when I was a coach. And even when I went to my first two-day session in 1999, down in Springfield, I was all fired up, I go, oh, I love this open book management stuff. And we didn't hire coach. We did ourselves implementation. But we started off very simple. All we shared were revenue, expenses and profit. And literally, it took us six months as an organization to vet out all the questions and all the issue, which then led us to the next step, because people are like, how can we not make that much money? Or how can we make more I mean; it was all over the map. Some thought it was too high, some thought it was too low questions, dialogue, but the amount of time that myself is the CEO had to spend on that was crazy. And but fortunately, we had a great team, everybody bought into it. So, we had a team approach to those questions. But it's not easy. So, this is not an advertisement or a push to say go hire a coach. But I would say it is and you guys acknowledged it both of you said we didn't have the capacity to do it, right? Because that learning curve is so big. Having that extra resource or capacity is important. So, if somebody is on here thinking, well, can I, do it? You can, but just be forewarned that it takes a lot. Because if you don't answer the questions, that's when it backfires. Because then you can't get there. And people doubt it. They don't, it doesn't build trust, it actually takes away trust, because you won't answer the questions, or I don't have time. And that isn't going to give people move into an Employee Ownership mindset.

Jon Stiles 30:34

And, you know, employee ownership, and owning the books, it's kind of a foreign concept for people. And an even when you teach it, you know, they're scared of it. It's, it's like you, if you walked up to the employees, and yet, and you just had a bag, and you said, stick your hand in it, being a lot of them are going to go, whoa, wait, what's in there? No, they're not going to believe that it's anything good, then it's fine. It's probably human nature to think, oh, my God, it's something bad or something's going to hurt me. That's the same thing with without being the books is. There's a real hesitation there. It's I've never been allowed to do this before, you know? Why are you showing me this stuff?

Perry Schisel 31:16

Yeah, yeah, we're actually going to bring in a consultant and educate our leadership team and mid-level management all the way up. So, there's probably going to be 50-60 individuals in there. And just how does our plan work? And what is the yearly cycle of the plan when devalued from the valuation to you know, repurchase obligation to cash and people out that have retired or left the business and how the stock gets redistributed back into the plan? You know, I mean, myself and our CFO, you know, we talk about it all the time. And we tried to explain it to many people as we can, well, we can only read so many people, and they're probably sick of hearing us talk. So, we're going to bring in a consultant to help just educate the management level team. So then, as they run into the questions with the rest of our team members, they can help explain, because I mean, a lot of our team members still don't understand how they get stock. Mm hmm. Right. And we've been talking about it for years. You know, it's almost like we got to create this type of ESOP handbook. So, they can go back and look, and okay, this is how this works, right? And remind them of that. Because otherwise, it's Yeah, I heard it. Yep. That's great. And then I go back to my job, right? It just isn't helping get the message across. So, we're going to try that.

Victor Aspengren 32:35

So, and you guys might resonate with this, I think employee ownership. And I will say, open book, you know, if you practice the Great Game, what you're trying to work towards is that adult to adult relationship, where accountability doesn't scare everybody. And let's talk about this as adults, because I think a lot of organizations have a parent child mentality. It's like, I'm the boss, do what I tell you to do. And then a lot of the employees are like, well, hey, you're the boss, you're supposed to take care of me. And I've got a perfect example of this in our evolution. This is back in the day, the company picnic, the summer picnic, you know, or whatever events. So, our ESOP committee was in charge of it, and many of you may resonate, it was always the same group of people that did all the work to put on the picnic or the Christmas party. So, the ESOP committee said, you know what, we're going to do a sign-up sheet. And if we don't get six new people to as a subcommittee to help, we're not going to have a summer picnic. And I said, good idea. Well, guess what happened? They didn't get six people. And we didn't have the summer picnic. And I'll never forget this moment. So, we had two buildings with a parking lot. We used to have to call parking lot meetings, because we had a building over here and a building over there. And they were two completely different cultures. So, I'd get everybody together in the neutral territory of the parking lot. I'm walking across the parking lot. And Tom comes up to me, and he points the finger at me. And he would just at me. He goes, Victor, he goes, it's just insane. We're not having a summer picnic. He goes, that's your job as a leader to have that summer picnic. And I'm like, oh, and I said, well, Tom, I said, I had nothing to do with that decision. I said, the ESOP committee came up with that process, and they didn't get signed people and I say, quite frankly, I'm kind of happy don't have the picnic because I'm a busy guy. It's okay that we don't have it. Oh, God, you would have thought, you know, I committed but it's like, hey, I had nothing to do with that decision or that process. And then but after that, we There was never a sign up, that there weren't six people on, but it took us now one time of we didn't have it because it was entitlement. You know? And the people that did the work were said we're sick of doing all the work if people can't step up, and I think that's that adult to adult, because what Tom came at me is like, you're supposed to take care of this. No. We're adults. And they made a decision. And we dealt with it. So, I think that dichotomy and sometimes people don't think about it that way. But I do believe that the Employee Ownership mindset is based on two adults having a good conversation, not that you take care of me or do what I tell you to do. I don't know what you guys think about that.

Jon Stiles 35:36

You mentioned, you know, when you came in ESOP, and you started paying bonuses, you know, you're right, you said that first time when they missed you would pay him 100. But, you know, what really gets their attention is to not succeed. I think that gets a lot of people's attention. You know, very few people learn things when they're winning, but when they lose, if they have any retrospective within them at all, that's when they have a chance to really learn from what happened. So, you know, missing a bonus on a quarter and getting zero. There's a great way to learn a great way to be forced to learn. Because all of a sudden, you realize, wow, you know, I guess this really is up to us to make sure that we get this.

Perry Schisel 36:21

Yeah, we've missed more bonuses than what we've got. You know and it wears on them. And I mean, again, the bonus calculators up there, the numbers are up there. Here's what we got to get to, here's what we got to hit. You know, we can do this. And how are we going to get there? Let's get some comments gone. Right. And yeah, I mean, after missing a couple bonuses in a row, you start hearing some grumblings going, well, maybe it's the Great Game that's causing us to miss these bonuses. Like, time out, wait a minute, wait a minute, everything about the Great Game is making us better. We mean, we'd be even in a worse position if we weren't playing the Great Game of business. Right? So, you got to kind of reset, you know, their expectations a little bit. But, you know, and but yeah, it's pulling them in going, okay, we didn't hit a bonus of this quarter, we missed it by this much. Right. Now. What are we going to do the next quarter to get that bonus back? Because you don't lose it? Right? If you're following the rules, you don't lose it, you can get it all back. But now we have to make commitments to what we're going to do. Right? We just can't sit here and go, oh, we're going to work harder? No, that's no, we got to think like businesspeople. What actions do we need to take, and you continue to try to lead them through that thinking process, they come up with great stuff they do. They'll come up with great, great information and ways to do things. But again, it's, it's helping them get focused, right? It's not blaming does, that's not an adult conversation, blaming the Great Game that we didn't get a bonus, let's focus on what we're in control of and what we can do.

Victor Aspengren 37:50

Well, and it's not just blaming the great game, but it's the human nature, we want to blame somebody else. It's the CEOs fault. It's the leadership team's fault. It's my managers fault, or it's my coworkers fault. You know that that's not the adult-to-adult relationship that we're talking about. It's like, there needs to be a logical reason. I mean, one of the things that we talked about in our employee ownership is because we want people to think outside the box, right? Be an owner, let's question what we do. And we literally had to outlaw the saying, because we always had, it was it was taboo. I said, and that includes me, as the CEO of anybody gives you that answer. When you ask a question. That ain't good enough. There needs to be a logical, legitimate answer. Now, you may not like the answer. But there should be an answer, not just because we always have because if you want to create employee ownership, that statement just is like the Buzzkill. You want them to step up, and somebody says that to you, because I remember back in my day, especially when I was younger, and knew when I really was on fire, not that I'm not on fire now that I'm older, but when I was younger, I was really full of it. And somebody would say that to me, I'd look at him go, you got to be kidding me. And you're the boss. You're a dingdong.

Jon Stiles 39:11

You're here years ago, when we had multiple stores and I was the operations guy in Northern Kentucky and I had a, like my peer in Louisville. You know, we kind of got to the point in time where we decided if someone said, well, that's the way we've always done it. That became the immediate reason to change it. There was just man it was wait time to change

Perry Schisel 39:37

in our core value of strive for excellence. We wrote it right into our core value good enough or that is the way we always do. It does not exist in our vocabulary.

Victor Aspengren 39:46

Nice.

Perry Schisel 39:47

It's written right into our core value.

Victor Aspengren 39:52

And do you find that people do not answer I mean, literally, that kind of went out of our dialogue within our company. It took a little while. Yeah. But that the people knew that that's don't go down that path.

Perry Schisel 40:06

Exactly, no, it takes a little bit, but we don't hear it anymore. We don't hear it at all.

Jon Stiles 40:12

You know I think part of the resistance that you get from employees about, you know, one thing to learn is that it threatens to push them out of their comfort zone. And there's something about just clocking in, and I know, this is my job, I go out, and I find out what I need on my aisles, and I stock those. And okay, I've got to work a little bit to push our private label products, because I'm incentivized to do that. But I don't want to do anything else. And you know, we've tried to teach salesmanship. I mean, we're a retail store. And there's always been a resistance to that, you know, no employee is doing, they're not really interested in getting personal with people. And, and, you know, someone says, kind of shy, and, you know, they'd rather just, you know, do the old Hi, how are you looking for anything? No, I'm, you know, I'm just looking around and fine, I'll be over here. And that just doesn't cut it. And, you know, when you when you put them in charge of numbers and making numbers that it kind of forces them out of that easy position they have, and they need to learn how to be better salespeople, and they need to learn to do things that they've never done before and do things that they're not maybe comfortable doing and become comfortable with them. It's, you know, it's, there's a certain easiness of not being responsible, and just coming in just doing your job, you think your job is and getting paid for it and clocking out at night.

Victor Aspengren 41:46

When you say that, Jon, you know, for employees, I, it also goes the same for leadership. And I have to comment to both of you mean, both of you that have admitted that when you look back, it's like, Man, I muck that up, I should have done that differently. And not all leaders are reflective or willing to say, raise their hand and go, you know what, that one's on me? You know, I wasn't thinking about it, right? Because the example that people look up to is the CEO or the president of the company. And when you're willing to make those public statements just like you guys, we have a whole audience and you guys are publicly announcing that you've made some mistakes. I think leaders, that type of leadership also encourages employee ownership mentality, because if you're a leader that can't accept a mistake, or that something happened. I think that kills and I'll never forget, I made a mistake. Once I forget what it was, I made a company announcement and then I completely screwed it up. I mean, I screwed it up bad. And I came back on the PA, and I said, okay, everybody hears I think it had something to do with the bonus. And I said, I mocked this up and everything else. And I'll never forget, Peggy came up to me and she goes, Victor, she goes, you know, you are human, too. It's okay. But it's the fact that you got it out there. But people are very forgiving to everybody, when they make a mistake, if they're willing to go like this. You know, if you try to sweep it under the rug, then not so much. Because people go really come on,

Perry Schisel 43:26

They won't follow you as a leader. I mean, if you can't be humble and admit your mistakes, you're going to lose people, they're not going to respect you, they're not going to follow you as leader. That's not the kind of person they want to follow, right or work with. Right? So, you lose all your leadership credibility, if you cannot admit you're wrong, or you're screwed up, you know, and again, if we're striving for excellence, I'm going to try new things. And some of those things aren't going to work. And I'm going to admit that, right. But otherwise, we're not stretching ourselves, or we're not trying new things, and we're never really going to learn as much as we could. Right? I mean, you can learn by failure, too, is again, keeping them with between the guardrails and don't burn the business down. Something that we're trying, but again, you have to do that stuff. You have to and then as leaders, we got to set the example of saying, Yeah, I messed that one up, that didn't work. That didn't work at all. So, it's okay to try those things. Near a lot of people have these limiting beliefs, that they're not good at something like that. Like, Jon, when you were talking about sales? Well, I'm just not good at that. That's just a limiting belief, once you can break through that limiting belief and help them work through that. Oh my gosh, they just take off and run with it. And for whatever reason, people we all have them. Right? And we got if we could identify them, we can beat them and we can work through and help people work through them too. Because we hear it all the time. I'm just not good at that. Why? Why do you think you're not good at that right?

Jon Stiles 44:48

And then a lot of that, a lot of times that's simply because they haven't been given a chance to try to do it, given the freedom to try to do it. You know, and sometimes that can fall on you know, their close supervisors, you know, a lot of times, you know, what gets measured gets done. And, you know, you and I can sit at the top. And we can say, we want this to be done, and we're going to measure this. But, you know, we have, you know, other layers of supervisors who are measuring other things, then it's a real disconnect. And, you know, I said years ago, you know, we stressed customer service, but then I'd sit there in the office, and I'd watch new employees be hired. And once they got through their, quick orientation, their tour of the building, they were handed off to a staff member, the first thing that they were taught, was how to shoot a stocking pick, that was their first thing that they were taught. And that's obviously, you know, stocking shelves is more important than teaching them good customer service. Because that's what the rest of the people on the floor valuing is, you know, we don't care how good a salesperson is, the guy is going to be can he stock as much as we do. Because that's what we're going to teach him. And that's how he's going to be judged. And, you know we're still sort of stuck in that to this day.

Victor Aspengren 46:17

And that's tough to get out of those cycles, we, back in the day, we had lead people that had different teams that, that took care of putting together product and dealing with whatever. So, you know, one of the people's everybody wants to move up. And but you don't know what you don't know. It's just like, when you became the CEO, if you've never been a CEO, you don't know what you don't know, till you get there. And you're like, holy cow, this CEO thing isn't so great. And it's like anything, a supervisor, or whatever it may be. So, we came up with a concept. And maybe you guys have tried this, it's kind of like no fail promotion, or the opportunity to promote. So, what we did is we allowed every single person the opportunity to be elite. And we did it for a three-month period, we bumped their pay, they clearly knew it was temporary. So, it's like, you're going to get bumped up to lead pay based on your skill set. And you're going to get to try this for three months. And we had about 70 people, you know, all those leads, don't know what they're doing and blah, blah, blah. So, 69 Out of the 70 all had an opportunity to be a lead. How many do you think truly wanted to be a lead after they went through the whole process of doing that? What do you guys think?

Perry Schisel 47:37

Maybe 10% of them?

Victor Aspengren 47:40

What do you say?

Jon Stiles 47:41

Maybe 10%

Victor Aspengren 47:42

10%? Five, five people you're about, right? So, we went through all of that all these people said that they could do it, and they were going to be better at it and whatever else. But the whole thing was is until they got into it. But what it did for the team and for the company is everybody now knew what they didn't know.

2. You don't know what you don't know. Employees don't know until you give them the experience.

And so, when an issue would come up that affected the team, they go, oh, it's okay, whoever the lead was, we understand we get it, we walked in those shoes for three months. And now we understand what it is. So, it just lowered all of the tension. Because they had an opportunity to experience which kind of what you said Perry, people don't know until you can give them the experience. And if you can do it in a safe way, it does a lot to build up that Ownership mindset because they tried it and they came to their own realization, nobody said that they were bad at it. They just said I don't want it for that pay increase, you can keep it I'm going to go back to doing my other job have you guys any of you tried anything like that?

Perry Schisel  48:54  

Wake up three month we like a probationary period where it's they're trying out a new role. And you know, so we don't change titles we don't change pay or anything we just say take try the new role for 90 days. You know if you like it great if we like it, you know, if your manager likes a great will promote you change your title change your pay, if not, everything is safe, you can go back to do what you were doing. You know, it protects them and the company, you know, if the company seeing is not quite working out, you know, we're going to go back to the way it was no harm, no foul we tried .So we know that's

Jon Stiles  49:32  

With a retail store with you know, so much that's, you know, customer facing. I think it's difficult for us, you know, if we have an opening even if it's, you know, in a middle management position, we move somebody up it's hard not to fill that position behind them. So that if they don't succeed, you know, where is the spot for them to go and you know, frankly I know I mean, I've got 30 years of making mistakes. And I believe in the Peer Principle that, you know, you can promote someone to their own level of incompetence. And you know, just because they're just because they're good at what they do doesn't mean they're going to be a good supervisor of people who do that. I mean, I certainly see the advantages of it. But it's tough I think, for us to work that way. And people don't like to fail. You know, if we have a situation there where, you know, we're, you've tried that, and someone says, you know, yeah, wow, this was a lot more than I wanted to do. That's fine. But if they think they're doing a good job, and you know, they're not, that's a tough conversation to have.

Perry Schisel  50:42  

Yeah. And that's why we have the probationary period, because I lost somebody years ago, and promoted them to spoon to quick title change, pay the whole nine yards, it wasn't working, hard conversation, you know, hey, we're going to we're going to need to move you back to where you were. Well, they didn't want to do that. Well, they left, you know, and we lost a good person. And that's the learning I had is don't promote too soon. It gets slow and make sure it's safe for both parties. 

Victor Aspengren  51:08  

Yeah. If you can have that safe Testing Zone probationary period, whatever you want to call it, that does make a huge, huge difference.

Perry Schisel  51:16  

And Jon I know it's hard because it costs you money, or it's difficult to manage. But we lost we lost somebody that we shouldn't have, you know, and that replacement cost is huge, too. Yeah. Right. Yeah. And you hate to

Jon Stiles  51:29  

do that. And you really mean, that's really your mistake. My mistake, you know, when I when I do that? No, it's no fun,

Victor Aspengren  51:38  

you know. So, and this shows my age, I can't remember if I shared this story on a prior roundtable. But you guys have both been talking about mistakes, and the fact that you learn when you make a lot of mistakes, but we used to celebrate making mistakes in our employee-owned company, we actually had an award for it. It was a toilet seat, that our graphics, people said, I give a crap. And you had to have two people nominate your mistake. And I went to the committee, and then every month, the top 10 would get up there. And everybody had to say, here's my mistake. And here's what we did to fix it. Because, as you said, you learn the most when you make a mistake. So why not take that into organizational learning for everybody. And then at the end of it, everybody would vote on who made the best mistake, and they got a certificate to the local steakhouse to go out to eat with them and their significant other now, but we did put the adult on this, we said, Now, if you make the same mistake three times in a row, you're probably going to be going to the HR office to have a conversation. So, there are limits on the mistakes. But it was a way again, to drive out fear to build trust. And to learn that, hey, we're all there. And after a while, people would just come up and say, oh, I screwed up. Because they knew that they were going to get like chastised or beaten down, because it's like, well, we all do it. And it started to open that up. And then it kind of fed into playing the Great Game of Business because it impacted numbers when we made a mistake, and maybe it was $1,000. Maybe it was a $20,000 mistake. But people just come up with it. Okay, well, we'll figure it out. We'll get it back. We just won't do it again. Because it happens.

Jon Stiles  53:29  

Yeah, you know, I, I kind of an atmosphere of celebrating mistakes. You know, it's, it's nice to see employees, you know, trying to do things, you know, stretching themselves out, even when they make mistakes, it's okay, and if you can, you know, develop that culture where they make mistakes, it's alright. It is empowering. And it means that though, they'll keep trying and, and, you know, it's like, it's like, people ask us, you know, why do you sell a $5,000 bottle of cognac? Well, because there's someone out there that probably will buy it. But if I knit it, but if I never buy one to try to sell it, I know I never do it. So, you try it. And you know if you know why limit yourself and the same thing Why limit your employees?

Perry Schisel  54:17  

Worst case, Jon, you get to drink it yourself if nobody buys it,

Jon Stiles  54:21  

Um, but that

Victor Aspengren  54:25  

There you go. Yeah. Yeah. Whoa, ball drink that $5,000 bond.

Perry Schisel  54:34  

No, I think it is you got to make sure everybody feels safe. And how we react as leaders to that is huge, right? They're reading body language, they're already afraid. They're like, oh my gosh, I'm going to get in trouble. And how we present ourselves in front of them matters. Even though we're saying words like hey it's okay. You got to watch how you're behaving your body language, everything. And then you know, all I look for is What did you learn? And how, how can you help somebody else that made that mistake, share it, be humble and share it.

Jon Stiles  55:06  

Yeah, I've always told them that, especially if they're, you know, making a decision that's in the customers favor, they'll always have my support. Now, you know, if I disagree with what they do, what we're going to do is maybe we'll discuss it afterwards, so that they have more information the next time, make a better decision, but they'll never be chastised for it. And if they did something in the customers best interest, that's their call, you have to you have to empower your employees to do that. That's where you  get your best levels of customer service.

Victor Aspengren  55:36  

So, you guys are both you practice the game or you're getting reengaged in practice in the game, and you talked about safety and trust. Do you guys use the practice GGO practice of you know, the quadrants like DEF CON 1234, whatever you want to call it, where based on the business, because ultimately, you know, the worst decision you have to do in a business is when you have to lay people off because you can't support that many employees or whatever. So, it's that Great Game concept where it's like, here's business's usual DEF CON one, two, we're maybe 10%, down three, we're down here. And that actually lists out the declining revenue, but also the steps to adjust. And then finally, in that final quadrant, it actually says you're going to have to lay people off because the business has dropped off that far. Have you guys do you use that? Have you used that at all within your company being ESOP's because I think it's a very valuable tool, we used it, and people paid attention to it? And then they weren't surprised when all of a sudden, because the prior culture was one day was busy. And the next they were laying off 10% of the people, and they had no idea it was coming.

Perry Schisel  56:50  

We try and you know, we don't use that specific graphic. But we do as far as we can see, as far as our schedule we can see, which is, you know, some three, six months, sometimes we can show everybody, here's how busy we are, here's the staffing levels that we're going to need, you know, everybody's going to be working or we need more work in a month, we got to find more work because we're starting to fall underneath our staffing levels. And we might have to lay some people off. So, I mean, it's more of a transparency, it's more of an awareness. And it's more of, hey, we've got a lot of backlogs, we're looking great for the next six months, or no things are going to be a little up and down. you know it's all hands-on deck to secure more work and keep everybody working. Or we can start new projects or initiatives that we can pull people in, you know, our training, we do a lot of training  when we're slow. And we try to get all our training hours in to keep people on the payroll. And then we can get that out of the way when we do get busy, which is usually later in the year. But there's always yes, I've already talked about here's worst case scenario, and we're not even close to there. Right? We're like way back here. Right? I remember Jack Stack did that once. I think one of his books I read he had something happened. And he took people right to the edge going this is where the business is going off the cliff. And we're way over here. Right? We're not even close to that. But that's possible. Right? I mean, it's I wouldn't be afraid to talk about that people do because it's a reality, it could happen.

Jon Stiles  58:18  

And we've never we don't use anything like that. And, you know, we had some tough years, early on and in the ESOP, cash flow can get really difficult, but we never had to get into a layoff situation. You know, obviously, the, you know, pandemic and 2020 threw some curveballs at everyone. And, you know, there was a lot of fear when it when it first happened, you know, would we be able to keep the doors open? You know, conversations between me there, they're talking about sleepless nights for weeks on end. But you know, conversations with my CFO, just, you know, okay, what, what if we get shut down? You know, what can we do for the employees? I mean, how long can we pay them? How long can we afford to pay them? What would be we'd be able to do? You know, the lucky thing was impressed, we were considered an essential business and never had to close. But, you know, even then we were restricted in hours. And, you know, it's, you know, we ended up we were very lucky . And, but, you know, I guess one of my fears in was that if we really did have to lay people off, you know, my preference would be that, you know, to talk with the employees and say, hey, let's, let's all take a cut, let's all take a cut because we don't want to lose anyone. And I guess that's one reason why I want to, you know, get to the Great Game of Business and teach them that, get them to grasp what it means to be employee owners. Because if they're ever in a situation like that, you know, if it's, I mean, okay, there's there will be a line and maybe it has to happen. Before that. I'd like them to make a decision as a group, but well, okay, we're all going to take this hit. We're not going to cut anybody out. Because my fear a year and a half ago was if they were given that decision, he'd start pointing fingers really fast about, okay, get rid of him and get rid of or get rid of him, but keep me. And it would have been done from a very, you know, my standpoint. And I want them to get to the point in time where they realize that, you know, they're all in it together, we're all in it together.

Victor Aspengren  1:00:26  

Yeah. And that that's exactly what we went through back in the early 2000s, is we did the pay cut top to bottom. It was there, and the leadership team took even more of a pay cut. But everybody knew it was there. And everybody knew that it was happening, and that we were all in this together to get through the crisis. But there's always, as you said, Perry, there is that cliff, even when you do those, those measures, sometimes it still takes you to the cliff where you have to make those hard decisions. But I, but again, I think when people can see it coming, it's always better. It's no different than when you have a poor performer, you just don't go to them and say you're a poor performer and see ya. It's there should be a process that they're very fully aware of why they're not performing and why their employment might be at risk, because you have a good process, and you're talking about it. So yep. So let me I'll ask you guys this, because we were we've got about 25 minutes left here. But could each of you share, like, what's that one group, just that awesome employee ownership story, you know, where you saw somebody, and you could just, you know, here's where it was, like you saw this happen, you know, I call maybe that Kodak moment, which shows my age, or maybe it's, you know, your text, your cell phone moment, where you can, you've got that picture in your head. And it's like, now that's what I'm talking about, when you could see somebody moving from point A to point B, when it comes to that Employee Ownership mindset. You have one of those you could share with the audience. Very well, I'll give you time to think about I'll share one while you guys think about it. So, this was a this was during that rough time. And we had to lay some people off and we made it public who it was going to be or whatever, but I'll never forget, Cliff came to me. He was one of our inventory guys. And he had a garden, he had all these other things he was doing to make money on the side. And he came to me, and he said, hey, Victor, if you need to lay somebody off, you can lay me off because I got a lot of things to do. And I can still make money. I got all this other stuff. And I'll be okay. Because he goes, some of these people really need to work. And I was like, wow, I mean, he's thinking bigger. He goes, I know, I'll come back. But I'll be okay. Some of these people can't be as okay. And to me, I'm like, did that guy get it now, he couldn't get laid off, because he was one of those people that could do a lot of different things. So, we needed that versatility when we were shrinking our workforce. But the fact that he went there, the fact that he was willing to sacrifice that for his team members in the near term. To me, it was like one of those magic moments this guy gets it. He's thinking way about, you know, he wasn't a supervisor, he was just a rank-and-file employee owner that was thinking about the good of the whole versus the good of the one. So that's kind of my story of that ownership. Aha.

Perry Schisel  1:03:35  

Yeah, we have. Oh, sorry, Jon, go ahead.

Jon Stiles  1:03:40  

You know, for me, I think 2020 In the pandemic was a, was a very good opportunity for us. And, you know, I almost hate in the conversations to say that good things came out of such a bad situation. But, you know, it gave our employees and our entire team and everyone a chance to step up. And, you know, wasn't just great fear that, you know, we had as senior leaders, but you know, everyone was scared about their health and their families help in their jobs. And there was great fear there. You know, we kept communication open. And we really kind of found what all of our employees could do. When they when they did work together. There was a real special esprit de corps that came out of that, you know, we were living every day listening to the comments of the Ohio and the Kentucky governor's what was going on? You know, would they close us down? What changes would they make to our business? You know, we, you know, had to had to take good care of our employees’ health we had to, we had to do things to the store, in you know, through all that with when we had to create a curbside pickup, you know, in a week, we had to create that we had we had lost our website to a data breach. About eight months earlier, we got a backup on March 13, just in time. But we had to, you know, we had to create curbside, and people were doing multiple jobs. And then in the middle of all this, we had to, we had to do a reset of the store, because we know that if, you know, we could do it, to maintain good social distancing, we had to completely remodel the front end, I had to double the size of the liquor department had to move wine and to move beer. And we did all this in the middle of all this other thing. And, you know, it was probably one of the best attitudes that I've seen in the store that that everyone came in, and they attacked these things. And they, you know, they helped make decisions and they appreciated, you know, our decisions and in the way we were being as transparent as possible with everything that was going on. And I think, I think that really did show some of the power of employee ownership.

Victor Aspengren  1:06:10  

That's great. And, you know, you're, you said about COVID. But it's just like any good crisis, or any bad event, there's always a silver lining, there's, if you don't look at it with the doomsday mentality, there is something to be learned. I remember I had a sociology of work Professor back when I was in college, and he shook his finger at me goes, Victor, there is no such thing as failure. As long as you learn, you will never fail. If you do not learn, then you fail. But as long as you learn, you will never fail. And I'll never forget that because that was my semester when I flunked out of college, and I was feeling like a failure. And he gave me that lecture. And then I snapped back. I'm like, okay, Professor Cohn. Good advice.

Perry Schisel  1:06:57  

Yeah, we were looking at some losses on some of our jobs. And I'm like, well, you know, there was, there's a lot of money. And I'm like, well, that's, that's pretty expensive learning. What did we learn that we get our money's worth? You know, let's make the best of it. Okay, it happened. We can't change that. So, what, you know, how are we going to learn from it. But I think of one of our team members that has won, we give an ESOP award or whatever year. So, it's, it's an employee ownership award of who who's acting like an owner, right, who's showing all those characteristics. And this individual was, is a unique individual, because we'd sit in meetings, and we'd have company meetings and the CFO, and I would be talking about our stock value in the ESOP. And he would always ask a lot of questions. And I'm like, you know, let's this bro, he's really inquisitive, about like that, you know, it's a really good sign. And even, you know, meeting after meeting, he'd be asking questions. And finally, it dawned on me, he knew the answers, he was trying to ask questions for other people that had questions, you know, that he was trying to get more people to understand it. And here, lo and behold, he was meeting with the CFO going over financials and trying to learn, you know, all this, all this stuff about our financials. And I'm, like, look at look at this. This is yes, this is a picture of what it looks like. And that was one of the reasons he won the award that year, is just, he just showed just, uh, the interest that you want to see. Right. And he was not only learning himself, but he was trying to educate other people as well and bring that information to them. So that that, never forget that's a really, really cool story. And great person, too. So 

Victor Aspengren  1:08:35  

Awesome. So as long as you think about open book, playing The Game and all of that, you know, that's on the employee ownership side. But again, do you have a story were practicing the game, it's like, wow, if we weren't practicing the game, this one happened, where there's actually there's some numbers behind it, but it's the mentality behind it. But it's also the numbers. You have a story where you can share by practice in the game whether it's revenue, whether it's profit, whether it's a reduction in inspect expenses, then you go, it's because we did open book and started practicing the game of why we recognize this. 

Perry Schisel  1:09:17  

I would say one of our mini games called scram, I think Baker likes to use that in his presentations. It puts 1000s 10s of 1000s of dollars to our bottom line, and we were just throwing it in the in other people's dumpsters before we caught on and play that mini game. So that mini game alone. I mean, like I said, it just it just puts 10s of 1000s of dollars to our bottom line. I think forecasting gave us so much insight into the future, right? It just, I don't know. We wouldn't be able to live without forecasting right now. Because we can see things 1-2-3 months out like never before, and then you can control that future as much as you know as much as you can. Right. But we can see where we're going to be buried in work, or we need more work, you know, we can see the manpower fluctuations, we can see our revenue going up and down. You know, we're ending our pipeline to that now, it's just, it's really opened our eyes to be nimbler, as a business and move quicker in React sooner the situations where we be, it'd be on top of us before we know what was happening in the past.

Victor Aspengren  1:10:24  

So, in the past, you were maybe a few days or maybe a week,

Perry Schisel  1:10:27  

A week, maybe a week. Yeah.

Victor Aspengren  1:10:30  

And then you look back and you say, how did we How did we function? When you're, when you move the needle that far? It's like, how did we even run our business? on a on a week?

Perry Schisel  1:10:40  

Well, it was like this. Yeah, I mean, we had peaks and valleys, and, you know, we just couldn't see stuff coming. And now it's known we've got so much, so many, so many analytics, that we can see that it's amazing. Yeah,

Jon Stiles  1:10:55  

we've just, we've really never played the game. So, it's, it's hard to come up with, you know, any of those examples. But, you know, and our location, and we've been open for 30 years now. And, you know, it's, it's not quite so many hills and valleys in terms of our business, it's actually pretty, pretty darn predictable year after year. So, we, you know, we know what's, what's coming, and we can plan doesn't mean that life can throw curveballs at us, in terms of men, you know, we could get a big competitor across the street, you know, tomorrow, and we have to adapt to it. But, you know, it's just the fact that you know, we just haven't, you know, we just, we don't have those, uncertainties in our business. But, you know, so we never forecasted, for the most part, I mean, we, we don't have a, we don't really set a budget, we kind of set, you know, some basic goals that we have to tell the valuation company every year, and you know, a little bit of things to, you know, keep the bank happy with us. But, you know, we don't forecast, and I think that's one of the things I'm really looking forward to is, you know, teaching these people and opening the books, and getting them involved and having them help the forecast these numbers and to work towards those numbers. We're just kind of lucky, we, you know, we're in an industry that's, you know, kind of recession proof and, you know, growth has come naturally, you know, but I think you know, we're entering a time when we have to work for growth a little bit harder. So, I'm, I want to see the power of forecasting, and I'm really looking forward to, hopefully the power of unleashing these employees, and empowering them to make this work even better. Yeah.

Victor Aspengren  1:12:51  

Yeah, ours was one where we, well, you guys, Perry, what state are you located in? 

Perry Schisel  1:12:57  

Wisconsin, 

Victor Aspengren  1:12:58  

Wisconsin. So, both of you have your lottery, the state lottery. So those little plastic boxes that pull the tickets out of that was the company that I first became the CEO of years ago. So, we had a product where in the back, we had these rods to hold the thing together, and they were powder coated. And so, we had two guys, they would sit there with a chop saw cutting metal rods for, you know, hours on end, and then we'd send them out to get powder coated. So finally, they came, and they said, they said, hey, you know, why do we powder coat these rods? And I go, I don't know. So, we went to the salesperson said, hey, why don't we powder coat these rods? She goes, well, I don't know. So, we said, well, we'd better go ask the customer. So, at the next show, she went to the show and asked the customers and said, hey, clients, you know, do you care if these rods are powder coated in the back? And they're like, no, all we care about is those tickets come out in the late taxes and scratch, they could be pink polka. Or whatever. We could care less if they're powder coated. So, she came back and told the people that were cutting those rods in is like, wow, well, what do you think the bottom dollar is? Because they were thinking, you know, that's a lot of money we spent and then it screws up the scheduling because you got to go through another process. We had to send them out. What do you think the dollar amount was that that one to the bottom line that year? The cost of the rods 60 grand $60,000 a year we spent on powder coating. And how many years do you think we'd been doing that? We have been doing that for six years.

3. When more employees understand the numbers, the more ideas you have to help improve the numbers.

So, that whole mentality of teaching them the numbers and understanding the profitability and then go back to our thing about trust and all of that. I mean, we had a celebration you know. We gave everybody like chamber dollars instead of cash, you know, or the chamber bucks to the local community. We had a big celebration, and neither one of those people want an anything extra, but recognition and, and everybody's like, well, you guys, when you're going to do that again, do that again sometimes so we can all get that $100 in chamber bucks. But it was a great example at big money, big money that changed, definitely changed our value in our ESOP. I'll tell you that added 60,000 profits to our bottom line was a was not a small number at that time. Yeah, definitely. Yeah. Yeah. Well, we've got about 15 minutes left question here. What would you tell someone? Oh, this is a great question. What would you tell someone who is nervous or scared to open the books? Carrying Jon, what would your common be for that?

Perry Schisel 1:15:57

I would say, be honest, be transparent. And be honest of here's what we're going to show. And here's what we can't show. And here's why. Right? I mean, there's just some things that you know, whether it's attorney fees, or, you know, maybe you're paying a recruiting bonus for somebody you got to hire, you know, what I mean? There's just, there's some things that is that inform useful information to for from an employee owner standpoint that they can do something with, right? So, there's a balance, there's a balance, you want to show as much as you can be transparent about it, and then just be honest about here's what we're not going to show and here's why.

Jon Stiles 1:16:35

Yeah, I think you know, if you're nervous or scared about it, I think you need to ask yourself, why are you scared? Or were you nervous? I mean, there's, there's the only limit that I see for us, is we don't, we don't divulge salaries or wages. But everything else? Yeah, I think for me, is open for part of the open book management process. I mean, if they, if we're paying an attorney for something they need to know about it, as I said earlier, I mean, you know, I don't want secrets here because I don't ever want to do this, I don't ever want to have to lie to somebody about what a line item is. And don't, because that's really bad. You know, you're lying to the employee, once you've decided to go open book, and especially if you get caught in it, it's just the wrong thing to do. So, if you're nervous about it, you know, find out why you're nervous. And if there are some things you need to fix before you go and book, go and fix them, you know, get rid of your secrets, you know, stop, doing some of the things that you don't want to be honest with the employees about, and, and then just do it because, you know, especially if you're an ESOP, or there's any degree of employee ownership, it's not your money, it's everybody's money. So why shouldn't they have every bit of the access that you have, you know, they need to know that they, they really need to understand, because they don't, and, you know, you guys make good points before and Great Game of Business that, that, you know, when you don't, when you don't open your books, and when you don't educate people about how much money the company is making, everyone has their own idea. And that, you know for every dollar of revenue, some people think you make, you know, 90 cents, some people think you make 50 cents, no one really knows. So, you might as well tell them, and in, you know, it's going to shock a lot of them that, you know, maybe only you make a nickel, you know, that's that nickel is your profit, and, and it starts to open their eyes. But if you're nervous about it, figure out why. And if you've still got some secrets, straighten them out. And then I think you just I don't see a lot of bad things coming out of it. You know, you hold them accountable, and they need to hold you accountable. You know, I'm happy to be accountable to our employees.

Perry Schisel 1:19:07

I don't know, you know, I mean, minority size versus 100%. You know, Aesop's are controlling Aesop's, maybe it's different. I mean, I've talked to plenty of different companies that are ESOP. And I don't know if anybody does it exactly the same way. You know,

Victor Aspengren 1:19:20

Whatever your lately,

Perry Schisel 1:19:22

Whatever you're comfortable with, right? And get back to Jon's point, get comfortable with it. You know, if you're going to do it to whatever, whatever degree, just get comfortable with it, because you will get questions. And those questions are good questions.

Victor Aspengren 1:19:36

Yep, I totally agree with your statements. And it's always scary when you first go there, but just being open and forthright, but giving people the true data. And this happens all the time. You know, I share the story. You know, it's your it's your kid or your spouse that was supposed to be home at 10 a 10 o'clock at night and they show up at 2pm By the time they walk in that door, you've already got the story filled in your head, you haven't talked to him, You don't know what's going on, but you already got a story when they walk through that door of why they're late it coming in at two instead of 10. With no facts, and it's just human nature, it's the human essence, when there is a gap in the head, we're going to fill it, and we're going to fill it. And typically, we fill it with stuff that, who knows what, why it got there, or why it may be in our history, or past or emotions or whatever. But in many, many cases, it's not filled with facts and good data. It's filled with just stuff. And then you got to you got to rework it all take all the stuff backwards, because I guarantee you what you said, Jon is right, people are out there talking about how much money it makes people are talking about wages. You know, I give the example we actually we shared wages in the sense we shared wage ranges for every position. And the leadership team at that time, thought I was out of my gourd. And I said, well, if they're going to be owners, how can they if they don't know that, then how do they know what their opportunity is, if they want to try to better themselves and move up. So, we even we shared wage ranges. And there was, you know, that whole process behind it top to bottom, I go, you want to be the CEO, there's, there's my pay range. And we did it. And quite frankly, it got rid of all the garbage that people thought, because people always that everybody knows what everybody makes. In their head. Many cases, they don't really have the facts. And like, the week after that meeting, I literally had six different employee owners come up to me and say, I would never be the CEO for that money, you're nuts doing being the CEO, if that's all you're making that your range. So, it really eliminated a lot of hiccups. Now, that's way out there. So, you know, when you say you’re scared period, your point is right, pick the numbers that you can deal with to begin with, just like I said earlier, all we did was sales, expenses and profit, you don't have to share a lot, but just start down the road and see what you get. Because if you try to do too much too quick, I think that's the dangerous part. You don't have to do this all at once you can figure out the drip, you know, test it out, see what happens, see what the response is because you don't know how the organization is going to respond to it. You know, take the baby steps and tap into the resources, whether it's on the website of the Great Game, or if you do hire a coach, or honestly finding a peer just like, you know, CEO to CEO, somebody else that might be in your industry, that's practice open book, what a great resource to be able to go to that person say, hey, when you did this, because it's more similar, you know, if you're in construction, or if you're in retail, like Jon is, there's a different vibe that goes on that maybe can be helpful for those people that don't know, those first steps. So, but yes, is it a scary move? Yes, I don't care when you do it or how you go about it. It's a little scary when you first start. But in the end the results, going back to it. It changes mentality and gives you moves people, I think to an employee ownership mentality, whether you have an ESOP or not, it gets that ownership thinking going. The ESOP is the technical real dollars and cents of retirement plan that layered in on there, but that in itself until that number becomes significant, and that's in the eye of the beholder. That you don't cross the ESOP doesn't cross to the Ownership mindset, you know what that number is 1000, or 10,000, for some people might be 100, until they see that amount of money in their ESOP. They don't connect the Ownership mindset. But once it becomes significant, but who knows when that happens, it could take a year, it could take 10 years before that trigger actually happens, which is one of the myths miss with ESOP's. So well, we've got about five minutes left. So, I'm going to throw this back to you, Jon, and Perry, is there any last words of wisdoms or anything else you'd like to share with the audience as we think about Employee Ownership mindset, practicing the Great Game on open-book management, leadership, just any parting words of wisdom that you would have for our audience?

Perry Schisel 1:24:21

I would say start, just start like I say, if you're going to open the book share information slow like Victor said, that's a great way to look at it. You know start playing start practicing you know, the Great Game of Business when I went to Springfield in 2018, after I read the Forbes article about Jack and his whole team at SRC you know, I couldn't wait to start I just thought it was the best thing ever to be able to bring this back to the organization to give them tools and just a system of how to look at business and how Learn about business, you know, a me coming from performing employee owner to an owner, you know, I'm wondering, oh my god, if everybody can think like an owner, I mean, we're going to be unstoppable. You know, and it really has, I mean, it's done. It's done some great things for us. I'm a big fan of it, we're, you know, we're going to, we're going to continue to use it for as long as I am here. I can tell you that many, but it's practice. It's practice, practice, practice, you start out slow, it's hard. You're not good at it at first. But you got to have the discipline to stick with it. It's called forecasting for a reason, because you're not even close. When you start forecasting. It's just like, wow, we're terrible at this. But you get better. We get we got to a point where we got the one month forecast down, and then we are now we're out to three months, we go through a full quarter out, so but you got to start. You got to start. So, it's well worth it helped our business tremendously.

Victor Aspengren 1:25:54

Thanks Perry,

Jon Stiles 1:25:55

Jon. You know, for me, if you're if you're contemplating an ESOP. I'm a huge proponent for it. I think, ESOP is great. And I think in our industry, we were probably one of the first or may have been the first employee-owned liquor store. But since that time, we've probably, you know, helped for these for other companies that I know have become employee owned, either 100% or partial. But you know my advice if you're contemplating it, and that's what you want to do, involve the employees and the staff early on, and educate them, you know, he goes up to that date when you're finally going to become an ESOP, because you'll be much better off. And if you, you know, if you you're already into it, and you haven't done that, then ask for help a coach or something, some kind of help, because you can't run your business and do the things that you need to do. And still have time to do that, because it is time consuming. And, and I did, I made, I made that mistake. And I call it a tragic mistake, because I think, I think the company would be even farther along than we are. Now if I'd have done that seven years ago, if I'd have reached out either professionally, or even within the company and tried to bring a small group and let a bill budge. I thought I could do it all myself, and I can't. And you can't do them all yourself. But it's really important. I see this, as is my legacy for this company, as I transition out of it. I want an educated, involved group of employee owners, I want them to have this opportunity to do this.

Victor Aspengren 1:27:37

Well, that's a great way to kind of edit that, as you said, Jon, to leave that legacy for the next level, the next leaders of the company, you know, down the road. And so, you guys, thank you for sharing your stories. Thank you for being so open and honest, and just baring it all out there because not everybody is willing to do that. So, I think that's by people being willing to do that, like you two did. I think our audience got some really good stories and advice on how to go about this and the great game. We'll have ESOP Roundtable number five. So that's part of that legacy. There'll be another group of stories and thoughts about open book management, employee ownership and all that good stuff. So, with that, Jon, and Perry, thank you so much. You guys have a great holiday season. And to everybody out there have a wonderful holiday season, as well. Thank you, to you, guys. So, with that, we'll conclude we're two minutes early. So, I hope nobody gets upset. We're two minutes early, but we are. So, we'll see you all later. Thanks a lot. Bye.

Steve Baker 1:28:42

Well, 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.

Announcer 1:28:55

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

Topics: Company Culture, Employee Engagement, Transparency, Planning, Finance

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Hosted by Rich Armstrong and Steve Baker the Change the Game podcast highlights true life stories of organizations influencing positive change by doing business differently. They’re teaching people how business works and closing the gap between the haves and have-nots. It’s capitalism at its best. Inside each episode, you’ll discover stories of entrepreneurs who are Changing the Game.

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