¶ CEO Transition: Setting Clear Boundaries
From the headquarters of Ramsey Solutions, this is Entree Leadership, where I take calls from leaders like you about what it takes to win at any stage of business and leadership. I'm Dave Ramsey, your host with over 30 years of experience leading in the trenches right alongside you. If you've got a question you want to ask on the show, fill out the form on entreleadership.com slash ask or call. And leave us a voicemail. We'll get back to you and get you on at 844-944-1070. 844-944-1070.
Roscoe's with us in Charleston, South Carolina. Hey, Roscoe, how are you? Hello. Hey, I am the operations officer for a 12-person managed service provider and IT company. We did about $1.3 million in revenue last year. And my question is, is in your experience, How have you defined owner versus CEO roles when those are two different people? Well, in our case, they were one person, but we still kept them very separate. So I did 99% of the operational decisions around here as the CEO.
meaning that me and the leadership team would have a problem or an opportunity in the middle of the table. We would wrestle, fight, fuss, argue. Whatever we do, that's how we process stuff around here until we wrestle to the ground the issue and as a group of leaders that trust each other and we would grow a consensus.
on how we were going to deal with that thing in the middle of the table. And once we wrestled it enough, the rest of us, some of us are on one side of the table, some of us on the other, and I led the group discussion. without manipulation to get to the best answer, not to what I wanted. And that's where we were taking it. And so that's the CEO role. Sometimes the arguments in there would get so forceful.
including me, that the leadership team might take a step back. I might have pushed so hard they were back on their heels, and they would say, hey, That sounds very forceful and passionate. Are you speaking as the owner and saying this is what we are going to do, or are you just arguing the point? And 99% of the time I'm just arguing the point. I generally do not play.
the trump card, so to speak, of owner and say, you will do what I say because I'm the daddy. Sure, if I may. So the current owner is. stepping down as CEO next year and I am transitioning into the CEO role. Well, he'll maintain ownership. And so that's kind of where I was going to... That means he's operationally out.
He's not going to argue with you about where you buy copier paper. I appreciate that. I guess some of my fears were, you know, is he going to be looking over my shoulder sometime? Yeah, that's what I'm saying. He doesn't need to be. The only thing he needs to be involved in is something so big that it's tilting the whole room, and you want his advice as the owner. What is your direction to me on this super large thing?
But the hiring and firing of somebody working there, he doesn't need to be involved in anymore. The product decisions, he doesn't need to be involved in anymore. He's no longer working there. That's pretty much what has been communicated. I just wondered if, in your experience, or however much you've done this, if you've...
you know, documented that or contracted that, you know, Hey, these are, this is the lane I'll stay in. And this is the lane I want you to move forward in or something like that. Yeah. I think you say you lean into him with honor. and say, you have built this. It's a legitimate million three business with 12 team members. You're stepping back. You want me to run it on a day-to-day basis. I need your input on the big things.
but you're going to hamper me being able to run it if you get involved in all the little things. So let's make a clear written agreement. It doesn't have to be a contract, but lots of communication of what the lanes are. This is out of bounds. This is not out of bounds. And I want to honor. what you think is inbounds or out of bounds, but if you step back but you don't step back, then you're not stepping back. I appreciate that.
¶ Defining Roles and Documenting Agreements
And that's the thing. So, you know, my son is the president of Ramsey. I'm the CEO. But today he runs about 80% of Ramsey. And that means I don't. I would say we don't sound all that different today, except that, you know, he's not my dad. I know, but I'm just saying, other than that, that's the only difference is the family connection.
which makes it even more difficult than what you have. So what I'm asking for if I'm you, I think I can best honor you and serve you and serve this place well if I have very clear lanes. that i can run in and i don't want to take on more than you want me to take on you tell me where out of bounds is
And I want to honor you by respecting that out-of-bounds marker. And if I get up next to that out-of-bounds marker, I'm going to pick up the phone and call and say, hey, as the owner, how do you want your CEO to do this? two questions if i may so how soon do we do that uh or how late in the game do we do that and then you know i think he's planning on retaining his office here in the building for what
for his advisory role. Okay, then we need to know what the percentages are and where the lanes are. Because the children, you know, if you've ever had kids, or your brothers and sisters may have pulled this off, where if mama says no, you run to daddy? Absolutely. Yeah, you're going to have that if you're not real careful here. So the team needs to know where the lines are. Right. Yeah.
I will keep an office in here when I am no longer the CEO, but only because, not as an owner, but as a Ramsey personality, because I'll still be doing all these shows. because I intend to do those until I don't make sense, which some say has already happened. But anyway, we're going to continue to do that. So I think you're going to have to have just some clear lines for the team to know.
Otherwise, they're going to run to daddy and run to mommy and try to play one of you against the other one. And it's a small team. If they don't have real clear things. You know, you guys are just going to have to pretend like he's not here anymore. He still has an office here, but he's really only here for me. The rest of you, you got no access to him or whatever, you know, but if he wants them to still run in there and tell him stuff on the side.
you're not really in a CEO role. You're more of a vice president at that point. And let's just call things what they is. If you're going to stick around and still be running the place, then you're sticking around, still be running the place. I mean, we can give it a name, but...
You know, if, you know, if it walks and talks like a duck, it's probably a duck. So, you know, that's what you've got to get into and figure out. But I think you guys need, the two of you need to spend more time together. as to exactly what these boundaries are, and if you'll approach it, I want to honor you. I don't have any desire here to take over. I'm not trying to throw my weight around. I don't have any weight.
I'm just trying to say, how can I serve you and how can I honor you? And until I know exactly what my lane is, exactly where the boundaries are, what you don't want me to do, what you are okay with me doing and you're not going to bother me about. then I can run real efficiently and run this place for you as the owner how you want it run. But we need to spend some time on that. Y'all need to do an off-site and just sit with yellow pads and white boards and just fill them up.
and then gel them down, and then talk about it some more, and then gel them down. And then the first two or three months you're doing it, you need to test against that document. Say, are we sticking to this document? Again, it's not a contract. It's just a term sheet in terms of... We are communicating what we've agreed about so that I can continue to do what you want me to do. No harder, no easier than that all the way around. And yeah, very clear lanes, very clear roles.
All of you out there, guys, you've got to have clear lanes. You've got to have clear rolls. And then we know if we're interfering and we have to know why we're interfering. Oh, wait a minute. Somebody's being incompetent. Somebody stepped outside of bounds. Oh, okay. But unless you have an out-of-bounds marker, you don't know that. You got into leadership because you wanted more. More freedom, more flexibility, more impact. But somewhere along the way, more turned into too much.
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¶ Confronting Leader Incompetence
That's E-N-T-R-E to 55123. Nick is in New Zealand. Hey, Nick, how are you? You're home well, thanks, Dave. How are you? Better than I deserve. How can we help, sir? First, thanks for taking my call. I lead a team of eight people in an operations department in a business that imports and sells industrial equipment.
We have a total of 23 staff, including the owner of the business. My question is, how can I address the longstanding poor timekeeping of a fellow department leader? The poor timekeeping... and attitude towards it create in-house jokes. I attempt to stop the in-house jokes, but I feel like by stopping the in-house jokes, I'm defending the poor timekeeping. What can I do that I haven't already tried? Or do I just have to accept the tardiness and the jokes? Hmm. Well, um...
What you're saying is that one of your peers in leadership is incompetent, right? Yeah, yep. He's not leading by example. Oh, he's tardy. Is that what you said? Yeah, yeah, yeah. Oh, it's not his team that's tardy, it's him. It's him, yeah. So why is the owner or the president or the CEO allowing a leader to misbehave at that level? I'm not 100% sure.
talk directly with the owner and uh i can't seem to get so you told the owner this guy's tardy all the time and he's like the laughing stock of the place um and he said what He said, I know, I'm talking to him about it. He says it's going to get better. And that's obviously not true. There's been small improvements, but not... The guy's 30 minutes late, 30 to 40 minutes late every day. He still stops for his regular breaks and still leaves on time.
Well, that's demoralizing to everybody else. I agree with you. It's disrespectful and aggravating. And the owner being a wuss and not doing anything about it is also disrespectful. John Maxwell calls this sanctioned incompetence, where the owner or the leader knows that someone is incompetent and is sanctioning it. by allowing it to continue and uh we all know in business or in life we get what we allow and so if i allow you to do this continually we're going to continue to get it
Obviously the owner is not as concerned about it as you are, or I am me and you would have already done something about it. Um, and I don't think, I think the jokes are a natural by-product because the guy is a joke. So, um, I mean, I don't know how hard you want to push it. Apparently, the owner isn't worried about it enough to do something about it.
I'm guessing that they have a close relationship and that guy that's late has been there a long, long time. Yes. Yep. He is a longstanding employee. We're both. long-standing employees of the company. And so it's a small organization that the jokes... are an issue, you know? Yeah. It's something that people talk about they don't need to be talking about. Yeah. And I don't know what to try next. I was hoping you might have some gold nuggets for me. It starts and ends at the top.
So I don't know what to try next. You know, I guess you sit down with the owner and just tell him that and say, hey, the jokes are, this is demoralizing to the team. The fact that you haven't done anything about it. everybody's kind of laughing at all of us and their leaders because they think we're doofuses. And I can't really stop them from doing it because this guy is coming in late.
You know, as long as we sanction that, as long as he keeps doing that, that, you know, we really can't enforce anything and stop the jokes. But people don't respect him because of that, and they don't respect the company because of that. because of this continued thing. So how can I help you with that? And ask the leader, how can I help? Because this is what I'm observing, and I'm one of your leaders, and I'm not mad personally at the guy, but this behavior, it's pretty bad.
And, you know, how can I help you? And do you want help? Or do you want me to shut up and leave it alone? I mean, because if you do, then we're going to just keep getting more of what we've always gotten. And just see what your owner says. You're not in a position to fix this, and there's not any persuasive phrase you could just throw around that makes the guy not come in late, other than if you do it again, you don't get to work here.
Yeah, which I can't say. Yeah, you're not in a position to say that. So the owner is, and the owner could lean in and go, but I don't want the owner to turn around blaming it on you either. I want him to have a backbone. have enough courage to deal with this himself, but he hasn't exhibited that so far. So I don't know how to get him, you know, run him over to the local store and pick him up a backbone.
I don't know how to get him to do it. Maybe he just is not concerned about it as much as you and me. It drives me nuts just listening to it. Yeah, if the answer stays the same. Yeah. If the answer stays the same, the product is going to continue to be the same. And then you've got to decide, is that an environment you want to spend your life in? And he's going to end up, because when you demoralize the place, the thoroughbreds don't stick around.
Long term. I mean, I'm not suggesting you jet tomorrow over this, but I am suggesting your frustration level is rising and your owner is getting ready to lose a thoroughbred because he won't deal with a donkey. And so... I, you know, it has forced me to become stronger, more firm as a leader because I'm...
It's not just me and that guy that I'm dealing with. It's all the other people watching me and that guy. And they're watching to see what that guy does, and they're watching to see what I do or what one of our leaders does in relation to that guy being late.
What are you going to sanction? What's okay here? And behavior is a language. And if you say this is okay, then by not dealing with it, then it's okay. And you're going to have a whole organization that says take it easy, and by God, they mean it. And that is a problem. That's a problem. So, Nick, I'm frustrated with you, brother. The only answer is you and the owner in his office. I mean, you might try to confront the other guy, but I don't think the other guy cares.
I don't think he's going to turn around because you confronted him in the office with the owner or not. One-on-one. I don't think he cares what anybody thinks. I think he's arrogant. I love entrepreneurs. Don't forget, guys, I started my company on a card table myself. So I know what it's like to have people counting on you, your team, your family, not to mention your customers. and when you're the one signing the paychecks you can't afford to fly blind.
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¶ Scaling Company Culture and Care
Question of the day from Daniel in Houston. Dave, I got about 70 team members and we're growing like crazy. I used to know everyone personally, but now I feel disconnected from the culture. How do you stay engaged as a leader when your company outgrows your direct? reach. You don't. I don't even know everyone's name that works here now. There's 1,100 of them. I used to know everyone's name, their spouse's name, and their dog's name. I knew everyone's illness.
And they're freaking birthdays. But it's impossible when there's 1,100. Oh, and by the way, 150 leave every year. And we hire another 175 or 200 with our growth curve. And so just about the time I did get it figured out, they'd screw it up again. So no, you can't keep up. What you can keep up with and what you do need to do.
is to make sure that their immediate leaders, one of your leadership principles is the leader that they are reporting to knows them, knows their spouse, knows their problems, knows their personal things, everything. and is very involved and loving them and caring about their future and wondering how they can grow and how they can do better and correcting them and all of that. That leader needs to have a real pastoral, pastor-like.
involvement with their team and deeply caring. So what I can do is I can hold my leaders accountable to hold their leaders accountable to create that kind of one-on-one environment. And then I know it's happening, but I don't personally know so-and-so who broke their leg and were praying for them. Okay? I really don't.
you know i mean that's happened uh unless i happen to work near them actually a guy that does work here in the booth broke his leg so they're all in there laughing right now but um
But, and I do know him, but that's not what I'm talking about. But I mean, there's people on the other side of the building. I don't know what the flip's going on with them unless it's something major, life-threatening or whatever. And so we... worked on this so hard for so long at one point we had 512 people and I had the entire operating board we made up flashcards with people's names and faces
and position. And we'd hold it up with a, you know, I had their name and their position on the back of the card and their face on the other side. And we memorized everyone's names in the whole company when there was 512 of us, all the operating board did. And that lasted about four months. And then there was enough change that we couldn't keep up with it. It's just freaking impossible. I was so distressed, I couldn't stand it. I wanted to keep knowing everybody. I wanted to always do that.
And now, you know, I'm standing in line, getting a hamburger in our cafe today. And I'm talking to a guy and he's like, Hey, good to meet you. Finally. I hadn't run into you. And I'm like, Hey, how long you been here? Seven months. You know, I didn't even met the guy. He'd been in the building seven months. That's just the way it is. There's 1,100 of us. I can't keep up with all of it, and I'm gone a lot. And that's, you know, oh, well. But it does kind of break your heart. It is a thing.
And the way you handle it and keep the culture to be maintained, a caring culture, a culture of involvement, of engagement with the team, is you make sure that the leaders are doing that. They're direct leaders, and you have to make sure your leaders are leading the direct leaders to do that, however many layers of leadership that you have. So in my case, I laid it in place as a cultural icon among the leadership team that that's how we treat folks.
And if you've got 10 people on your own team and you don't know every one of them and you don't know their spouse's name and what's going on in their lives, then you're not leading well at Ramsey. But if you've got 1,100, you're not expected to. And so, you know, that's the breakdown on that. But the way you stay engaged is you make sure that the leadership layers are fully engaged. And that way you create a culture of caring, a culture of prayer, a culture of...
direct involvement, of course, correction, accountability, encouragement, recognition, all of those things happen at that level of direct relationship. They do not happen from a CEO. of a company that has, you know, if you're the top guy out of 70 people, you probably ought to know all 70, and there's only 70, but it's not that big a deal. At 70, I did know everybody.
At 500, I had memorized all of them and it lasted four months. I just told you the story. So it was just too much. And we actually had a... board retreat and had a contest, and me and one of the other board members squared off and were the two winners, and one of the lady board members actually beat me. I missed one out of a hundred and something times we went through the thing, and she got them all.
straight she had them all dialed in but she's actually smarter than me so it's not fair i'm a victim actually but um which is not a position i very often take so Yeah, you teach people to love inside the organization, and it is a condition to be a leader here that you love your team and that you know what's going on with your team. That's how we do it. That's the whole process.
You wouldn't build a house without a blueprint, so why are you trying to scale your business without one? Here's the truth. Without a plan, you're just reacting, not leading. And if you're always reacting, you can't build the momentum your business needs to grow. That's why we're giving you Entree Leadership Elite's Strategic Planning Template for free. This is the same template.
My team uses every year to plan for the next 12 months of growth, and you'll also get the course that shows you how to use it. In under 30 minutes, you'll know how to build a clear plan to grow your business so you can finally get out of reactive mode. No more flying by the seat of your pants. Just clear, practical steps.
that take you from putting out fires to actually growing. Go to entreleadership.com slash strategy to get the free strategic planning template today or click the link in the show notes. You guys want to help us out? We could use the help. Click the follow button, the subscribe button. Leave a five-star review saying how wonderful we are and all that kind of malarkey. And share the show.
Click the share button if you got one. If you don't, cut the link out and send it to somebody. Go, hey, this YouTube podcast thing here, you ought to check it out. We would appreciate it. We know you're doing that because the numbers on this. This leadership thing is taking off. We appreciate you being with us very, very much. Jeff is in Salt Lake City. Hi, Jeff. How are you? Doing well. Thank you. Good. How can we help? Dave, long-time listener.
¶ Hiring for Performance and Passion
Love your show. Love what you're doing here. So thank you. Thank you. I'm running a handyman service in the area. And I'm the owner. And we're a team of about five people. And last year we did about $750,000. Wow. Our goal is to hit a million dollars this year. Good for you. One of the biggest problems that I've been having is hiring people. to in key positions as I'm growing and watching them fall short and not being able to figure out how to get them to.
step in their role or to fulfill the obligations that they need or even managing their time the way that I can, right? Like I'm in the position that I've done everything so I know what it takes to get it done. But I can't ever seem to get employees to even operate at half what I can. And wanting to get your opinion on how to manage that. Well, I mean, there would be two reasons that they can't.
operate at that level. One is they don't care enough, and two is they don't know how. They're not competent at the level you are. So, for instance, they could do X repair in... twice the amount of time you do it, but it's not because they didn't care, not because they weren't working hard, not because they were slacking off or something. It's just because they weren't as good as you at it. It's not as easy for them.
And so that's just a competency thing that should increase over time. I can't really fix somebody that doesn't care except giving them like one or two opportunities to care, and then I'll let them work somewhere else. Okay. And then what I'm doing there is I'm hiring for that. I'm hiring for both the talent, the technical talent, but I'm also hiring for the passion.
And so working for us means you work really, really hard, you work really fast, and you're really kind to the customer, you're clean, you clean up. after yourself before yourself and during yourself and so this is what this is how we expect and you know you may not want to do that if you don't this is a good time to figure it out because if you want to work here this is how we're going to do it
We're going to really be at it. We go for touchdowns here. We don't go for field goals. Okay. And that's the interviewing process. I have found myself back when I had five or six people. It was a long time ago, but I do remember it feeling like I had to talk them into coming to work with us. Yeah. No kidding. Oh, okay. Good. I read your mail. Okay, good.
So, yeah, I remember that. Like, I need the help, and it looks like you're a cool guy. And so then I spend my time, like, trying to talk you into doing something. And I've never talked anybody into being a good employee, being a good team member. You know, they already came loaded with that. And it's like somebody said, how do you motivate your people? I don't. I hire motivated people. And so...
Now I'm just really, really clear. I'm like, this is not for everyone, and it's going to be painful for you and painful for me if we don't decide on the front end. that it's not for you. And so let's figure it out. If you want to do this, this is what it looks like. And gosh, I'd love to have some help. I need some help. That's why I'm talking to you. But I also don't want to go through the pain.
of somebody that i'm not aligned with on the value system and this is what it works this is how it works this is who we are we work really really hard we care deeply about the customer everything's clean i'm clean and it's fast and we get our work done and
We're not trying to see how little work we can do. And we're going to see how much work we can do. And, you know, I want to reward you. I want to partner up with you. If we all make a lot of money, I'm going to share some of it with you. I'm not trying to do that.
¶ Coaching, Training, and Sustaining Excellence
You know, if you're looking for a J-O-B to mail it in, I'm not your guy. How do you know if you have a higher expectation than what is realistic? Because the thing I've been, again, fighting with is like, no, I've been able to do your job while doing this other job at the same time, and you can't even keep up with this. At what point do you feel like the person just can't do it or I just have too many expectations for it? I think that was a bad hire.
Your expectation is that they can do something similar to your speed within a reasonable period of time. Now, what's one of your top repairs that you do as a handyman? Well, that's the hard thing about a handyman is a handyman has to be skilled enough. Enough to do a lot of different things. But I mean, let's say something that occurs often. Just give me an example. Basin case.
uh doing base molding in a home and door casing it's a you know you have to finish trim okay so a little bit of trim a little bit of trim work okay yeah all right and so uh trim work is a bit of an art form it's not a hatchet job And so it is slow for someone that's not done a bunch of trim work.
So I would say, you know, if you've not done a bunch of trim work and you get some trim work, you can expect them to be slow a few times. But if they're slow because they're learning and they're getting faster, that's okay.
That is unrealistic for them to be caught up with you if they're not a trim carpenter. Okay. You've done a bunch of trim work and trim work is, let me tell you, you know, you know, measure three times and cut once baby you know right and you know the rule and uh other people know the rule but they don't live that rule you try to do trim work fast you get to do it three times if you're not good at it
Right? Right. And so, because the trim carpenters are the artists in the building. So anyway, the, yeah, that's a good example. So. What I'm thinking about if I'm you there is I'm going to say, okay, how much trim work have you done? Not a lot, but I like it and I'd like to learn. Well, you can expect that person to be half the speed of you initially, but in a year they ought to be about, you know, 80% of you.
yeah okay if they're doing it pretty regularly if they're not it's either because you haven't taught them a little bit said okay here's a here's a here's a shortcut on that making sure that angle works and um No pun intended on the cut, but yeah. But anyway, here's a way to do this that works, and you could coach them a little. But at the end of a year, if they're not, then they're either just physically not capable of...
doing that kind of work, which would be bad, or they don't care. And I don't know what you're running into, but yeah, I mean, something like that, something that has a little bit of technicality to it.
you know, that, you know, you should be able to show somebody most of the stuff you do, how to do it one or two times, then they ought to be able to do it. Agreed? Agreed. 100%. Yeah. And so it's not... you know how do i do this i i you know well don't lay around on that dishwasher for 45 minutes i can show you how to do it in three minutes and then next time you can do it in ten and then the next time you can do it in seven
And then after that, it better be three because it's just a simple, we're just changing out a valve here. Come on. And this is how you handle that sleeve and all that junk. So whatever the thing is, right? And I do think they'll get faster, but... They've got to take pride in their work and the speed of their work and the cleanliness of their work, the quality of their work, like you do. And you're not doing anything that's superhuman. You're not like a savant. You're just good at it.
And so other people ought to be as good as you. And so I'll give you an example over here, okay? I'm 30-something years on this microphone answering questions off the cuff. I had a guy in here the other day. He said, how do you do show prep? 30 years. We don't do show prep because we don't know what you guys are going to ask when you call. So I don't have a bunch of heads up. I got about three sentences on the screen. That's it.
So how do you train somebody for that? Well, it's the Ramsey personalities teaching them to sit on a microphone has taken five years. to get them to where they not only knew the answers, but answered them with some sass and answered them with some humor and answered them the way Ramsey answers them. The sad truth is that some of them have actually gotten better than me now because the ratings are up when I'm not here. It's distressing.
But yeah, you know, but that means I did a great job training and I did a great job hiring somebody that was trainable and that cares and that leans into a pretty technical thing and they learn the technical aspects of it. from a performance standpoint as well as the actual academic answer. And the same thing goes for you. You can find somebody, but I also have hired people that they just didn't have the it factor on the microphone and I couldn't, that didn't work out.
They just weren't, you know, they're just like a wet blanket on the microphone. So that's... the thing you're looking at so you can find people that are even better than you someday is my point and that is not an unrealistic expectation what might be an unrealistic expectation is the first time they do it they might not be that good
And it might take a year to train them up and get them to where they're running at 75% of you instead of 10% of you. But I have an expectation that they're going to catch me or we got a problem. And it's not like I'm slowing down for them to catch me. I want them to catch me. Or we got a problem. That's where we're going. So that's the kind of thing that I'm after there. And I think you can do that. But it's...
It's a matter of hiring the right people, interviewing with strength rather than begging. And I'm not trying to beg everybody to come to work here. You don't need to be here if you don't need to be here. But you've got to be fired up and wired up, man. We're trying to score touchdowns here. We're not just trying to make the playoffs. I want to go to the freaking Super Bowl. So bring it, baby. Bring it and plan on leaving it on the field or you ain't going to fit in.
And, you know, we talk about this stuff in the interview and some people are motivated by that and some people are run off by that. And it's a little bit distressing sometimes when they run off is I got to start again on the whole interview thing, but it's a whole lot better than having to rehire after I got rid of a donkey later because they really didn't want to be here. So that's what you're looking at.
and that's how we'll play it through. So good stuff, guys. Good stuff. Good show today. This was great. Hey, folks, remember better a weary warrior than a quivering critic. This world needs more high-quality leaders, so take courage and lead. I'm Dave Ramsey, your host. Thanks for joining us on Entree Leadership.