• Pay for performance motivates the whole team.
• Never let your success depend upon one customer.
• Look for your next business inside the one you already have.
• What you know is more important than who you work for.
• When hiring, look for a nice person who's a quick study with strong handshake.
• If you don't like the rules, work to change them.

Key Idea #1: Pay for performance motivates the whole team. 

Most salespeople are paid on commission, a combination of salary plus commission or a straight commission. However, everyone at Computer Directions is compensated based on revenues, so, each employee has a base salary and the opportunity to earn more. Wanda understands the important principle: what gets rewarded gets done. She also knows that by passing out the cash as the company prospers and not waiting till the end of the year, everyone stays excited about coming to work.

What do you think?   Would some people refuse to work in a pay-for-performance environment? 

Possible answers: Sure, especially if there is no floor.  And, that's ok.  If a person has responsibilities are is conscientious and can find a job with a guaranteed salary, fine for them. But, Wanda provides a floor below which a person's paycheck will not go. 

What do you think?  Is it important to Wanda that everyone in the home office have the same pay-for-performance opportunity ?  

Possible answers: Yes, because she is creating a corporate culture around this.  Everyday is a contest and the entire team works together to win.  It is not a competitive thing where an individual gets a piece of the sale while the others get the same old paycheck no matter what happens. 

What do you think?  Why don't more companies use more pay-for-performance techniques?  

Possible answers:  Because it seems more complicated to administer.  However, Wanda would say that the increased enthusiasm and team work that comes from this far outweighs the complexities of paychecks being different every two weeks.  Wanda is a computer geek, she understands software and with technology, calculating the paychecks is easy. 

What do you think?  Why do so many companies pay year-end bonuses rather than reward people exactly when the rewards are due?   

Possible answers:  Much is done because it has always been done a certain way and traditions are slow to die.  However, the year end bonuses sometimes are calculated on profits which Wanda says is a bad idea.   Greg Thurman of Hartford Communications agrees.   He says any accountant can rid a business of profits.  Employees should be rewarded on revenues or on their contribution to reducing overhead not on profits. 

Also, the more closely tied an employee's activity is to the reward, the more motivational the reward becomes.  Does this sound like Psychology 101?  Well, it is. 

FACE="Arial,Helvetica">You think back:  Are the field employees on the same pay-for-performance plan?  

Answer:  No.  The field employees are paid by the hour.  And, Wanda allows them to choose either straight pay or pay with benefits.  Basically, a computer programmer can decide if they want Wanda to handle their taxes and health care, or if they want to do it themselves.  The trend is to give employees choices.  The cost to Computer Directions is the same no matter what the employee chooses.  The big benefit is that the employee can design his or her pay plan. 

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Key Idea #2: Never let your success depend upon one customer. 

When Wanda owned a company that did document processing for mortgage companies she ended up being absorbed by one big customer. 

You think back: What happened to that one big customer?  

Answer: It went bankrupt. 

What do you think?  Why is it so easy for a very small company to become vulnerable  while serving a big customer?  

Possible answer: Key companies are intoxicating.  Part of this is our ego gets in the way.  You want to be able to tell your friends that your customer is JC Penny or BellAtlantic or Neiman Marcus.  These are households words and have a buzz.  So your friends say, "you really do work for IBM?"  And, you say, "oh, yes they give us tons of work." 

These big customers feel safe to you so when they ask for more, you accommodate.  You don't want to tell them "no" because they might go find someone else.  Wanda opened up offices all over the country to handle a single customer.  The cash was flowing and she had no time to get other big  customers.This is where I see the problem.  I'll take all the work I can get from one big customer but I want another big customer too.

The companies who have 8A status with the government often end up only doing work for the government and often focus on one department.  This is so dangerous.  The 8A status is designed to help a disadvantaged business owners get going so the designation doesn't last forever.  To learn more about government programs for small businesses, go to www.sba.gov.  But, don't ever depend upon one customer, even if it is the United States Government.

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Key Idea #3: Look for your next business inside the one you already have.  

Wanda's mortgage document processing company put her in an interesting relationship with her customers.  They were always asking for her help and advice on hiring technology people. 

What do you think?  Was Wanda in the right place at the right time to start Computer Directions. 

Answers: Yes, but in addition, she was smart enough to shut down one business and start a new one.  We have discussed the power of concentration here and Wanda saw no reason to fool around with her old business when there was so much potential in what she has today. 

Sometimes we hold on too long.  Bill Tobin said we entrepreneurs are like a dog with a bone, we work on that bone until there's nothing left.  But what Wanda could see was an opportunity that required her full attention. 

She had already helped place dozens of technology workers, she knew how to do and her clients were happy with the results.  Computer Directions has made money since day one. 

What do you think?   Does good work get rewarded? 

Answers: We always hope that's the case.  Wanda helped her mortgage customers find technology workers and did it as a favor for no charge.  She didn't know when she was doing this that was learning how to run her next company. 

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Young people know that they will not go to work for a company right out of college and stay with that company for 30 years then retire.    

What do you think?   How do we need to think about our work life in the future?  

Possible answers:  Wanda says it is more important for you to understand your talents and skills and to think of yourself in that light rather than think of yourself as an employee of any one company.  So, she says she is a systems analyst she does not say she works for XYZ Company.  You have a skill set that you carry with you from job to job.  

As a business owner then you should help every employee develop a set of transferable skills.  Provide continuing education opportunities and encourage everyone to participate.  On Target Supplies offer tuition reimbursement, Ebby Halliday provides on-site training   Mike Calise funded all of the training for his plant manager.   As Jim Schell said, you might think you can't afford to provide training for your employees but think about what it costs you not to provide training. 

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Employees consistently provide the surprise element for the business owner.  However, with a thoughtful hiring process, much of the surprise can be avoided. 

What do you think?  Can Wanda or anyone else really learn something from a handshake? 

Possible answers:  I have always noticed a person's handshake but I had never thought to use it as a way to measure a person's energy.  But, Wanda is an expert and she has years of hiring experience that has taught her that she can measure a person's overall energy by shaking their hand. 

Before I interviewed Wanda, I had already noticed how nice everyone in her office is.  I mean sweet-and-gentle nice.  This is another case for the point that like attracts like.  The ninety day trial period is when Wanda can validate her intuition about a person's level of niceness, but Wanda says she can choose nice people.  At Tires Plus they said they hired people with nice parents because they don't have time to teach people how to be nice.  

They are on to something here.  Wanda has time to teach a person how to do a job, but, she doesn't have time to polish the rough edges of a person who is insensitive or uncaring.  The group of employees who work in the home office of Computer Directions work in close proximity to one another.  They share a kitchen and they share in the pay-for-performance plan.  They have to depend upon each other.  Wanda is wise.  She knows nice people are much easier to interact with than the not so nice.

For more on the hiring process, review  Angell & Phelps, Le Travel Store, and Jim Schell's comments in the program about Todo Loco.

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Key Idea #6: If you don't like the rules, work to change them.
In our system of democratic capitalism, the government makes the rules/laws and we business people have to obey them.  Rules are good for maintaining some order in the chaos of capitalism, but, sometimes rules are bad and need to be changed.

You think back:  What does Wanda do to influence the rules? >

Answer:  She is a member of the National Small Business United both on the national state level.  She is also involved in politics.  She finds the candidates she wants to see elected and contributes to their campaigns.  

In the Fall of 1999, the Los Angeles Times study on small business discovered that those of us who live in Southern California are saying that the number one reason we can't grow our companies is the burden placed on us by the Federal, State and local governments.

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