Lesson #349: Consider an Unlimited Vacation Days Policy

 

At every company I have ever worked, from small startup to big corporations, there had always been a capped vacation day policy.  Vacation days would range from 10 to 20 days a year, depending on your role within the organization.  But, we tried something last year at our Restaurant Furniture Plus business--we moved to an unlimited vacation day policy.  And, an interesting thing happened along the way.  Read on.

The Advantages of an Unlimted Vacation Day Policy

The obvious primary advantage of an unlimited vacation day policy is your staff's positive reaction.  When we told our team we were moving from a traditional two weeks of vacation a year to an unlimited plan, their reaction was "WOW!!"  It earned us a lot of goodwill with our staff, as they saw that as a huge perk, having the flexibility to take as many vacation days as they want.

The secondary advantages included things like: (i) you no longer had to worry about tracking all the vacation days by person, which becomes more onerous as your employee base scales; (ii) there is no longer the need for tracking how many vacation days carry over from year to year, or how many untaken vacation days needs to get paid out at the time of an employee's termination; and (iii) it is a huge recruiting advantage for your business when trying to attract new talent.

The Disadvantages of an Unlimited Vacation Day Policy

The obvious primary disadvantage of an unlimited vacation day policy is your staff could take advantage of that perk, and  potentially take many more vacation days than you ever reasonably thought they should be taking with a capped policy.  But, this disadvantage, is largely kept "in check" by the employee's psychology, as described below.

The Psychology of the Employee With an Unlimited Vacation Day Policy

It is interesting the psychology of an employee with an unlimited vacation day policy.  There are three drivers that typically are on their mind: (i) they don't want to be perceived as abusing the system, so they typically take about the same amount of vacation days they would have under a capped policy; (ii) they are all busy people, and don't want to be buried by a sea of work upon returning from their vacation, which typically doesn't have them away from the business for very long or very frequently; and (iii) they are often taking vacations with their friends or family, and those other parties are typically focused on their limited vacation time during the summer or the holiday season. 

The Required Psychology of the Employer with an Unlimited Vacation Day Policy

At the end of the day, there is only one metric that matters on this topic--is the employee satisfactorily getting their job done and hitting their agreed upon goals, or not?  If they are hitting their goals, it doesn't matter if they are taking 2 weeks or 20 weeks of vacation, you should be thrilled with the outcome of their successful results.  So, post making this change, stop thinking about "why your staff member just took a three week vacation".  Instead, think about, "what has their job performance been, and are they hitting their expected goals, or not".  Said another way, manage your staff on their "outcomes", and not their "methods".

Closing Thoughts

What an unlimited vacation day policy really is, is an exercise in trust.  Trusting that your staff are all adults and will naturally do the right thing, by not abusing the system.  And, the reverse of that, your employees feeling empowered and trusted by their managers, which makes them feel good about their relationship with the company.  Which in turn, helps promote their long term loyalty and retention with the business.  We weren't sure this move to an unlimited vacation day policy would work or not, but both our management and our team could not be more thrilled with the results.

For future posts, please follow me on Twitter at: @georgedeeb.

[VIDEO] Best Practices for Splitting Equity Ownership in Startups

 

I was recently interviewed by the Atlanta Small Business Network (ASBN), an online "television network" serving the small business community, about how best to split up equity between startup founders.  I thought this video turned out great, and I wanted to share it with all of you, to see if it can be helpful to you in creating your own fair equity ownership structure.  As you will learn, there is no one right answer here, but you need to know what the variables are, and plan accordingly.  I hope you like it!!

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above.

Thanks again to Jim Fitzpatrick and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

Does Your HR Department Have Too Much Influence?

 

We love our human resources departments. They do a lot of good inside a business. They recruit, train and onboard employees. They set up benefit plans. They create a strong company culture. But I've worked with a lot of human resources managers who have crossed the line from supporting the business to dictating the direction of the business.  As the CEO, you need to ensure you know when it's happening and do your best to keep your business running the way you want it to.

Read the rest of this post in Entrepreneur.

For future posts, please follow me on Twitter at: @georgedeeb.

[VIDEO] How Product Innovation Can Grow Your Business

I was recently interviewed by the Atlanta Small Business Network (ASBN), an online "television network" serving the small business community, about how it is critical not to take your eye off the ball in terms of product development.  I thought this video turned out great, and I wanted to share it with all of you, to see if it can be helpful to you in setting your own product development strategies.  As you will learn, you need to constantly be innovating and iterating to protect your future revenues against competitors.  I hope you like it!!

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above.

Thanks again to Jim Fitzpatrick and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

Red Rocket's Best Startups of 2022

 

Red Rocket gets introduced to hundreds of startups each year, in the normal course of doing business, or via our involvement with various startup groups or events.  We wanted to honor the best of these startups that we met in 2022, in Red Rocket's 11th Annual "Best Startups of the Year".  This list is not intended to be an all-encompassing best startups list, as there are many additional great startups that we are not personally exposed to each year.  And, this list is not intended to be only for businesses that launched in 2022, it is open to startups of any age, that they or their advisors had some personal interaction with us in the last 12 months.  The business simply needed to have a good idea, good team or good traction, that caught our attention.  Congrats to you all!!

THE BEST STARTUPS OF 2022 (in alphabetical order):

Alpharank (CEO, Jay Rosenblatt) - B2B optimize online sales for banks

Alpine-X (CEO, John Emery) - B2C indoor snowsports resorts

Automatic (CEO, Eric Burney) - B2C used car finance

Contino (CEO, Robert Orr) - B2B2C urethral insert for bladder control

CRS (CEO, Marco Buhlmann) - B2B append credit data to approve card charges

Cusa (CEO, Jim Lamancusa) - B2C instant coffees and teas for people on the go

Duradry (CEO, Jack Benzaquen) - B2C antiperspirant for excess sweating

Moxey (CEO, Charlie Davis) - B2C a bartering currency

Pencil One (CEO, Tong Jiao) - B2B ecommerce photography production

Shortlist (CEO, Jeff Hyman) - B2B prescreened hiring candidates in days, not months

Tribucha (CEO, Mark Mullins) - B2C shelf stable, great tasting kombucha

TVDataNow (CEO, John Hamilton) - B2B CTV advertising measurement

VIZZR (CEO, Jian Wei) - B2B field service management platform from Ford and Salesforce

And, don't forget to check out the 2012 winners, 2013 winners, 2014 winners, 2015 winners, 2016 winners, 2017 winners, 2018 winners, 2019 winners, 2020 winners, and 2021 winners, many of whom continue to be doing great things.


Congratulations to you all!!  Keep up the good work.


For future posts, please follow us at: @RedRocketVC

Lesson #348: Great Resignation? Quiet Quitting? Look in the Mirror for Answers!

 The last year has introduced us to a bunch of new concepts in the post-COVID workforce.  The first was the Great Resignation, with an estimated 20% of workers planning to quit their jobs in 2022.  And, most recently, Quiet Quitting, where workers don’t actually quit their jobs, but instead, put in the bare minimum of work required to keep their employers happy, without putting in a minute of extra effort.  To me, these are both problems with the employers, not the employees.  Because if employees were actually happy, respected and engaged in their jobs, they wouldn’t feel the need to quit their jobs, either outright or in mindset while still employed.  This post will help us diagnose if you have any problems that need fixing in your business, to help stem this tide.

A Couple Unhappy Workforces as a Case Study

Let’s look at a couple industries where quitting seems to be at an all-time high: K-12 education and restaurants.  These are two industries I know well, with my wife a 2^nd grade teacher and me owning a business serving the restaurant industry.  In both of these industries, it is pretty clear to me why people are quitting; they are being asked to work their tails off with very little reward, where it is so much easier for them to switch industries and make materially more money elsewhere.  Not to mention how dysfunctional these types of businesses can be, without a lot of ways for their new ideas to be heard or acted upon, where businesses are being mismanaged, oftentimes with a lot of bureaucracy.  Why would anyone want to work in that environment?  Anyone that does is because they feel they have no other options based on their skillsets or because it is simply their passion project giving back to their communities, without making compensation or job satisfaction their ultimate drivers.  Which is not a great position to be in, for the employee or the employer.

Reality Check

So, how do we fix this?  We start with common sense that 20% of workers are not resigning the workforce overall, they are resigning YOU!!  There must be something you are doing that they are unhappy with that needs to be resolved.  That could be something like low compensation levels, their mundane day-to-day tasks, your company culture, lack of upward career mobility, a bad boss, lack of job flexibility or whatever.  So, if you are experiencing high levels of employee turnover, it is time to look in the mirror and start auditing everything you are doing, with a post-COVID mindset of what employees are looking for.  Let’s dig into that a little bit deeper.

Study Compensation Levels

Going back to our case study above, can restaurant workers really make a living wage at $15 per hour?  That is only $30,000 per year, in a world where inflation is off the charts.  After tax, that is only around $2,000 per month.  Let’s say half of that goes to covering their rent, and that leaves the other half, or $33 per day, to cover all their other living expenses.  That math simply doesn’t work.  Not to mention, they have to be on the job in person, when all their other friends are getting more flexible jobs that allow them to work from home.

And, the same thing for the teachers.  They are teaching our kids and setting up the future of our country.  It disgusts me that movie stars and sports athletes are making $25MM per year, and teachers’ starting pay is around $50,000 for doing a TON of work, dealing with hostile parents, and working in dysfunctional workplaces where the rules keep changing each year.  Enough already, teachers need to be better respected and a material bump in pay to justify those working conditions.  We as a society need to better value the roles they are playing, and all chip in with slightly higher real estate tax bills.

So, what does this mean for you?  Stop thinking of your industry in a vacuum, and stop using historical pay levels as a baseline benchmark.  You may need a drastic salary increase to retain and attract new talent in today’s market.  And, employees will seek out work in other industries, if they are unhappy with the compensation levels in your business or industry.  So, when studying average pay by role, do so across industries.  And, I didn’t talk about studying benefits packages here, but you should do that, as well, to make sure you are in line with the market.  A good benefits management company can help you benchmark yourself versus other employers.

If you determine you cannot profitably afford market rate salary increases, you may have a material problem on your hands.  But, hopefully, raising your prices, to better afford market rate salaries, will help you fund these increases.  God knows my restaurant bills have been going way up, as restaurants are paying their staffs more in an effort to try to retain them.  But, if price increases are not digestible by your customers, you may need to face the hard fact your business model may be broken, and may not survive without a material change in the model metrics.

Study Job Flexibility

Thanks to COVID, everyone prefers a more flexible job environment, starting with the option to work from home.   So, don’t be stuck in the Stone Age, requiring everyone to be in the office every day.  That will allow the staff more flexibility to save on commuting time, parking costs, gas costs, car costs, etc. and enables them to be closer to their families for taking care of their kids or attending their local school events or other appointments they may have.  You don’t need to “see them”, to know if they are doing a good job.  You will see their success in the data coming from their work (e.g., sales results, tasks completed).

Study Company Culture

If your staff are grumbling behind your back that they work in a “toxic work environment”, you have a major problem on your hands, and need to “plug the hole” before the whole “bucket” drains empty.  Survey your staff, either directly or through an HR consultant.  Ask what they like and don’t like about the business, and then lean into your strengths and repair your weaknesses.  Be sure to calculate your net promoter score of your employees, not just your customers, and shoot to keep that number at 8.5/10 or higher.

Study Management

You may love one of your managers, sucking up to you as their boss, but their direct reporting employees may hate them.  Be sure to complete 360 degree reviews of your employees, so they have a chance to speak openly about their boss, at the same time their performance is being reviewed.   Nothing will get a person looking for the door faster than being micromanaged, disrespected or verbally abused by a bad manager.  So, you may need to part with someone you like, for the greater good.

Study Career Paths

People want to stay in companies where they can see upward mobility in their careers.  They will give you a couple years in their current role, but what comes next?   Is your company growing, to create new layers of management for them to grow into?  If so, great.  But, if not, the employees may get bored and decide to find a new challenge.  So, put plans in place, for each role of the company, where they can easily get visibility into how their responsibilities and compensation will increase over time, to give them “hooks” to want to stay working with you over the long run.

Study Day-to-Day Tasks

Nobody wants to work in a job they don’t enjoy.  So, ask yourself: would you enjoy that job?  If not, figure out what it would take to make that job more enjoyable.  If it is eight hours a day of mundane, brain numbing tasks, figure out how best to make the role more stimulating—maybe sharing mundane tasks across a broader team that is doing more strategic tasks for most of their work.

Closing Thoughts

So, this concept of the Great Resignation and Quit Quitting is really hogwash to me, as the focus is on the employees, not the employers.  These people need to work to pay their bills.  You just need to figure out how they will want to work for YOU, and not be looking for the door looking to work for someone else that better values, respects, challenges and motivates them.  After doing this internal self-study, if the mirror is not broken, keep up the great work.  If you are staring at a bunch of broken glass, it is time to start fresh and rethink everything you are doing.

For future posts, please follow me on Twitter at: @georgedeeb.