Philip Campbell's Blog

Make Sure You Are Worth More Than You Are Paid

I'm not sure exactly how it happened, but very early in my career I developed a philosophy about work that has turned out very well for me. With the benefit of hindsight (30 years), here is how I describe my philosophy:

 

Make Sure That I'm Worth More Than I'm Paid

 

It's a contrarian view of work when you think about it.

The more normal view is to make sure that you are paid what you're worth. This is a normal approach since it says that if your role or value is $100,000, then you should be paid $100,000. It speaks to our common desire for fairness. One person/party should not "get over" or take advantage of the other person/party.

Another view that is very common is you should try to be paid more than you're worth. Why not? If someone will pay you more, then they must think you are worth it. If they will pay you more, you should take it, right?

These are three very different philosophies or approaches that, in my opinion, are very important to think about and understand in your career or your business. Then decide which one you should adopt as your guiding principle in the work that you do.

The Value vs Pay Quadrant

The approach you choose impacts how you provide value at work. Whether as an employee or entrepreneur, how you purposefully go about adding value and being paid will make a big difference in how you feel about your work and the financial rewards you receive during your working/business life.

I like to look at it as a Value vs Pay/Compensation Quadrant.

When you provide a very high level of value and you are well paid, you are in The Sweet Spot. Your primary thought process is how do I add even more value?

When you don't provide much value to an employer or a customer and you are not paid well, you are in the Weakness section. The worst of both worlds. It is easy for people to get trapped here because they feel taken advantage of because of their low pay/revenue. It is hard to think about adding value at a higher level if you think you are getting screwed as it is.

When you add value at a high level but you are not paid well, you are in the Strength section. Most people in this category are doing something they enjoy and they get a kick out of doing it at a high level. The problem is they have not figured out yet how to make the money follow. It's a position of strength because you are good at adding value and once you improve your ability to turn that into higher pay you will move yourself over to The Sweet Spot.

When you add little value but you are highly paid, you are in the Worry section. You know you are getting over on the boss or the customer and you are always looking over your shoulder. You know they are going to come to their senses… you just don't know when.

Common Sense vs Wisdom

"Common sense" says that the way you make more money is to, well, ask for more money. To put your focus on moving yourself to the right on the quadrant.

It's the "OK boss, give me a pay increase then I will take on the new role/position you want to put me in.

It's a "move to the right first (get more pay), then move up (add more value) approach to work. That's the "common sense" view.

But wisdom says you should first focus on moving up the value line… then to the right on the pay line. You should focus on adding more and more value then make sure that the pay catches up to you after some time passes.

Try This…

Consider for a minute where you are on the quadrant. You personally.

Then pick your best customer and see where you are on the quadrant as a company with them. Do the same for your worst customer.

You can do the same kind of exercise by picking your best team member and look at the value they provide to you vs their pay. You will get a quick sense for their philosophy of work by looking at where they land on the quadrant.

More to come on this subject! J

 

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Flying Blind: A Fascinating Problem in the Franchise World – Part 2

This is Part 2 of a short series of posts for franchisors and franchisees.

In my last post, I talked about the fact that most franchisors don't have location-level profitability and cash flow numbers. Meaning they don't have the full financial picture of franchisee financial performance at the location level.

I also talked about how this problem is unique to franchising.

5 Reasons Franchisors Are Flying Blind

Now let's look at why this has been such a big problem for franchisors.

…Because trying to get financials from franchisees has been like beating your head against a wall full of sharp razor blades (ouch)!

…Because you quickly found that once you did get some financials faxed or emailed to you that it was a painfully slow and incredibly labor-intensive process (not to mention error-prone) to enter the numbers into a spreadsheet so you could see the data and try to understand it.

…Because you realized you needed a "common format" for the financial information BUT every franchisee has a different chart of accounts, many use a different accounting system, the reports are all in different formats (some are highly summarized and some are very detailed), and someone on your staff has to make sense of that in order to enter the data in your "common format".

…Because you had a nagging fear in the back of your mind that the data "translation" process was not consistent or accurate. (The fact that you brought in a temp to do the work didn't help your sense of concern, right?)

…Because you quickly realized there was no way you could gather monthly financials from franchisees because this process was way too time consuming and costly to even consider doing on any kind of regular basis.

The Result

After living through that experience, you either killed the whole project or did the next best thing. You muscled a few stores into a spreadsheet, called it a benchmark (or franchise leaders, top performers, profitability study, or something like that) and provided it to franchisees as the result of your work.

Unfortunately, the numbers are all at least a year or more old. And you know that you are not going to even attempt to go through that painful process for another year or so (if then).

You also have no visibility into monthly results to see the impact of seasonality and other factors that drive the business each month.

So franchisees have comparison data that is not timely, is only a very small fraction of the locations in your system, is highly summarized, and is in your "common format" (even though their own numbers they will be comparing to the benchmarks are in a different format).

How Do Franchisees React?

And franchisee reaction is something less than enthusiastic.

And it's hard to blame them.

The information they got was definitely better than nothing. But it's a far cry from the kind of comparative, action oriented data you should expect from being a part of a system of hundreds of locations who are all in very similar businesses.

That leads to the next interesting (but very damaging and somewhat predictable) dynamic.

Franchisees are not at all excited about sending you their financials now because they know they are not getting much in the way of useful and insightful financial information in return.

"Why go through the hassle of sending them our confidential financial information when we get this kind of old, selective data back that is in a different format than our financials?"

The Solution

But the fact remains.

Franchisees are starving for easy-to-understand comparisons and benchmarks on the key performance measures to help them become more profitable and improve their cash flow.

In Part 3 of this post, I will share with you the 10-step process for creating financial rankings, comparisons, and benchmarks that franchisees can get excited about.

 

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Flying Blind: A Fascinating Problem in the Franchise World

There is a fascinating problem in franchising today. Everyone knows the success of any franchise ultimately comes down to financial performance at the location/franchisee level.

Yet, the vast majority of franchisors don't have location-level profitability and cash flow numbers.

Picture this…

You are the CEO or President of a company with 356 locations across the country.

You are an intelligent, serious-minded business person focused on achieving results. You want to spend about thirty minutes looking at location level financial results to understand the degree to which each location is making money.

You want to understand which locations are leaders in the key performance measures and which ones are lagging behind (and hurting your ability to grow the company).

So you ask your CFO or COO to provide you a report ranking each location on the top five key performance measures you and your management team have agreed really determine profitability in your business.

And, you ask, "Please rank them from best to worst and include a calculation for each location that shows how much additional profit and cash flow could put to the bottom line by improving their ranking."

What kind of answer will you get back?

Are You a Franchisor?

The answer you get will vary depending on whether you are in a franchise company or a non-franchise company. Let's look at the latter first.

If you are the CEO or President of a company outside of the franchise community, the CFO or COO would say "Sure thing Boss! I'll have it to you in the morning. I'll ask Traci to put the report in that format and add the profit and cash flow improvement calculation for you. No problem."

If, on the other hand, you are the CEO or President of a franchise company you will get a very different answer.

Your CFO or COO would say something like this "Well, uh, well, I can't really provide exactly what you asked for Boss. Um, many of our locations are making lots of money, some are doing all right, and a number are really struggling. Does that help?"

You mutter something to yourself along the lines of "No, that isn't really the information I'm looking for. I want to see each location ranked according to the five key performance measures we all agreed are the keys to financial success in our business.

With that kind of information I can set specific improvement goals and targets, hold people accountable for results, and I can hold our regional managers accountable as well. I can't do my job if I'm flying blind with respect to location profitability and cash flow."

Now, when can I get the data? Surely I'm not asking too much here, am I?"

Well, Uh, Well…

The CFO or COO says "Well, we don't exactly have all the financials by location. I could get you the report with just the sales data included. Come to think of it, we did do a benchmark analysis that might help you. The only problem is that the report went out about six months ago and the financials in the analysis were for the year prior to that. So the numbers are almost two years old now. Also, it only included 43 of the 356 stores. Would that help?"

Now, if this conversation happened at a non-franchise company, the CFO and COO would hear Donald Trump's famous line…

"You're Fired!"

No CEO or President would allow such an important component of managing the financial success of a company to be neglected that way.

But this happens in the vast majority of franchise companies today.

5 Reasons This Happens

In part 2 of this post, I will share my perspective on this problem having spent over 10 years as the CFO of an international franchisor.

There are 5 reasons this problem persists.

Next week I'll share my view on each one.

 

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Is Your Company on Track to Hit Its 3 Big Financial Goals for This Year?

Here is a five-minute exercise that could pay big dividends for you and for your company.

Take a minute to jot down your top 3 financial goals for this year.

Then ask yourself if the company is on track so far to hit those goals.

Sometimes a very simple and short exercise like this can help you quickly distill your thoughts and actions around financial goals into something revealing and action-oriented.

A Simple Productivity Tool

I wrote this little exercise after reading a great blog post from Todd Henry titled A Simple Productivity Tool to Make 2015 Super Productive. Todd is the author of the books The Accidental Creative and Die Empty.

In his blog post, he was sharing a card a friend had sent him. Here is the card:

What are you going to do more of this year?

What are you going to do less of this year?

Those are two questions that stimulate our natural tendency to always work on growing and improving in life and in business.

Take a few minutes to jot down your answers in both exercises. I bet it changes what you work on today. J

 

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