Bulldozer00's Blog

This Inc. Magazine piece, Lessons From a Blue-Collar Millionaire, tells the story of CEO Nick Sarillo and Nick’s Pizza & Pub. Like Tony Hsieh of Zappos.com , Jim Goodnight of the SAS Institute, and Ricardo Semler of Semco, Nick knows that the real key to business success is building a people-centric culture and relentlessly husbanding it so that the second law of thermodynamics doesn’t slowly but surely destroy it.

Here are some snippets from the article followed by comments from the peanut gallery.

In an industry in which annual employee turnover of 200 percent is considered normal, Sarillo’s restaurants lose and replace just 20 percent of their staff members every year. Net operating profit in the industry averages 6.6 percent; Sarillo’s runs about 14 percent and has gone as high as 18 percent. Meanwhile, the 14-year-old company does more volume on a per-unit basis (an average of $3.5 million over the past three years) than nearly all independent pizza restaurants. And customers, it seems, adore the service: On three occasions, waitresses have received tips of $1,000.

The above results clearly show that what Nick’s doing works, no?

Sarillo has built his company’s culture by using a form of management best characterized as “trust and track.” It involves educating employees about what it takes for the company to be successful, then trusting them to act accordingly. The company’s training program is elaborate, rigorous, and ongoing. The alternative is command and control, wherein success is the boss’s responsibility and employees do what the boss says.”Managers trained in command and control think it’s their responsibility to tell people what to do,” Sarillo says. “They like having that power. It gives them their sense of self-worth. But when you manage that way, people see it, and they start waiting for you to tell them what to do. You wind up with too much on your plate, and things fall through the cracks. It’s not efficient or effective. We want all the team members to feel responsible for the company’s success.”

There’s not much to add to the above snippet. I, and countless others much smarter and more eloquent than me, have ranted about the toxicity of dysfunctional CCH corpocracies to no avail.  CCHs litter the landscape anf they will continue to do so because of Nick’s quote: “They like having that power. It gives them their sense of self-worth.”

They had someone else put in the numbers, and when the numbers came out wrong, they didn’t dig deeper to discover why. Because they didn’t know the ‘why,’ they couldn’t share it with the team members. When you know the ‘why,’ it’s really easy to figure out what to do, but sharing that kind of information wasn’t how they’d been trained to manage.”

In the above snippet, Nick relates his experience when he mistakenly hired managers with the old “I’m the boss and I don’t do details – I’m better than that” 1920’s mindset.

People who inquire about a job receive a handout detailing the company’s purpose and values. Candidates need four yes votes from three managers to receive an offer. Just one of every 12 applicants to Nick’s gets hired. “I was really surprised by the process,” she says. “You get interviewed twice, and you take a personality test.”

Like other culture-obsessed companies, the interviewing process is key to separating the wheat from the chaff.

• 1 Feel your community’s pain; share its joy
• 2 Hire only A+ players
• 3 Learn, grow, compensate
• 4 Systems are for building trust
• 5 Coach in the moment, not after the fact
• 6 A consultant can be more helpful than you think
• 7 Turn negatives into positives by making talk safe
• 8 “Why” is more important than “what” or “how”
• 9 “Trust” without “track” is an invitation to trouble
• 10 Beware of growing before you — and the company — are ready

The above list represents the 10 key ingredients that Nick uses to drive his business. My faves are numbers 4, 7, 8, and 9. What are yours?