The Entrepreneur Next Door

Managing the Gap

ACCORD MANAGEMENT SYSTEMS, INC.(800) 466-0105 (805) 230-2100

www.AccordSyst.comwww.TheEntrepreneurNextDoor.com

www.EmployeeCompliance.com

Bill Wagner, CSP

• Surveyed the personality, emotional intelligence and brain dominance of 1,509 successful entrepreneurs

• Average age: 31 years old

• Average net worth: $3.4 million

• Age when started 1st business: 24 years

• Heightened level of self-awareness

• Able to manage the GAP

GAP

Climbing the Performance

Pyramid

What are the qualities of an Ideal Franchisee?

Assessments

Define the Position

• Create behavioral performance benchmarks for all positions

• Who do I need to be to be successful

Bottom line_

People perform at higher levels:

Increased self-awareness, improved morale and retention, enhanced productivity….

. . . profits surge.

©2003 The McQuaig Institute of Executive Development, Ltd.

® Registered Trade Mark of the McQuaig Institute of Executive Development Ltd., Toronto, Canada

Assess the Incumbent

• Measure the behavioral attributes of the incumbent

• What are my strengths?

• What are my Developmental Considerations?

Gap Analysis

• Measure the difference between who I am and the requirements of the position.

• Determine the actions that support these required changes/ behaviors

• Predict the energy requirements or frustrations that are incumbent on making these changes.

PROBLEM STATEMENT

Franchisors typically have the best of several worlds… ideas, technology and

capital.

The missing link has been capital of the human kind.

The franchise community is quickly catching up to the mainstream corporate

environment by embracing the tools necessary to create a sustainable,

competitive advantage.

Getting the People Side of Business Right has become the mission critical

imperative.

If you can’t measure it…You can’t manage it.

5 P’sAside form the 4 P’s

(product, price, promotion, placement), it’s imperative

that franchisors understand the most

important P. . .

PEOPLE.

Q: Why don’t all franchisees perform at the

same level?

They’ve made identical investments.They’ve received identical training.They have similar locations, build

outs and cash reserves.

A: They are not the same people.

EXHIBIT I Sales Performance According to Age Measurement period after hiring

Performance Quartile

1st 2nd 3rd 4th

6 months Over 40 9% 38% 32% 7% Under 40 10% 39% 30% 6%14 months Over 40 7% 26% 25% 5% Under 40 8% 25% 24% 4%Note: Sample sizes-after 6 months, 1,679 in over-40 group and 3,928 in under-40 group; after 14 months, 1,058 in over-40 group and 2,397 in under-40 group.

EXHIBIT II Sales Performance According to Sex Measurement period after hiring

Performance Quartile

1st 2nd 3rd 4th

6 months Women 11% 36% 35% 5% Men 9% 38% 32% 7%14 months Women 8% 28% 21% 4% Men 9% 26% 14% 7%Note: Sample sizes-after 6 months, 1,069 women and 4,227 men; after 14 months, 652 women and 2,494 men.

EXHIBIT III Sales Performance According to Race Measurement period after hiring

Performance Quartile

1st 2nd 3rd 4th

6 months People of Color 8% 39% 30% 11% Caucasians 9% 37% 21% 10%14 months People of Color 6% 25% 24% 7% Caucasians 7% 24% 26% 6%Note: Sample sizes-after 6 months, 271 african americans and 2,014 caucasians; after 14 months, 168 african americans and 1,269 caucasians.

EXHIBIT IV Sales Performance According to Experience Measurement period after hiring

Performance Quartile

1st 2nd 3rd 4th

6 months Inexperienced 10% 33% 36% 6% Experienced 11% 37% 33% 5%14 months Inexperienced 9% 25% 20% 5% Experienced 10% 27% 18% 5%Note: Sample sizes-after 6 months, 3,721 inexperienced and 6.934 experienced; after 14 months, 2,195 inexperienced and 4,161 experienced.

EXHIBIT V Sales Performance According to Education Measurement period after hiring

Performance Quartile

1st 2nd 3rd 4th

6 months High School diploma or less 7% 38% 31% 8% College diploma or more 8% 38% 30% 9%14 months High School diploma or less 10% 23% 22% 5% College diploma or more 11% 24% 21% 6%Note: Sample sizes-after 6 months, 2,694 w/ high school diploma or less & 7,348 w/ college degree or more; after 14 months, 1,616 w/ high school diploma or less & 4,556 w/ college degree or more.

Source: Greenberg, Herbert M. and Jeanne, “Job Matching for Better Sales Performance”, Harvard Business Review, September-October 1980

JOB MATCHING = BETTER SALES PERFORMANCE

A benchmark study published in the Harvard Business Review, dispelled the myth that factors such as age, race, education, gender, or prior experience were critical factors in job success. Use of assessments to match the behavioral characteristics of an individual to the behavioral characteristics of the job correlates with better performance, higher productivity and lower turnover.

Job matching based on behavior, personality, temperament and attitude is the deciding factor. When hiring or promoting, ask yourself: “Does the candidate have a reasonable behavioral match to the expectations of the job? If so, successful performance can be predicted and maintained over time.”

This study supports the premise that job matching is the critical factor in lowering turnover and increasing productivity, not age, race,education, gender or experience.

AMOUNT OF TIME PERFORMANCE QUIT OR AFTER HIRING QUARTILE FIRED

1st 2nd 3rd 4th

6-month/job fit 11% 26% 23% 14% 24% 6-month/not job fit 2% 10% 18% 24% 48% 14-month/job fit 19% 42% 7% 4% 28% 14-month/not job fit 1% 6% 14% 22% 57%

Use of behavioral assessments for job matching in your hiring process reduces turnover by as much as 50%.

According to the same Harvard Business Review Study, 61% of employees hired with the right personality became top performers (top 2 quartiles) within 14 months on the job. Only 7% of those without the right personality became top performers. Conclusion: Having the right personality makes success more predictable.

According to The Kauffman Foundation, a study on nascent entrepreneurs found the following:

• About 6.2 in every 100 adults 18 years and older are engaged in starting a new business. That means that right now, there are about 10.2 million adults attempting to start a new business.

• Men are twice as likely to start a new business as a woman.

• All ages with the exception of those older than 65 years of age are involved with the entrepreneurial process.

• Among the most active are young men ages 25 to 34.

• Blacks are about 50% more likely to engage in start up activities that whites.

• Hispanic men are slightly more likely to do a start up when compared to white men.

• Hispanic women and white women are about equally as likely to attempt a start up but less likely than black women.

• Approximately 26 of every 100 black men, 20 of every 100 Hispanic men and only 10 of every 100 white men with a graduate education are interested in going into business for themselves.

Obviously, entrepreneurship is pervasive regardless of color, education or background.

APPROACH

• Research indicates a direct relationship between personality, franchisee and employee engagement and the of generation of revenue therefore the generation of greater royalties.

• Positive generation of revenues is heightened when similar selection principles are extended to the selection of all employees.

Identify the variables that promote/hinder

franchisee selection and ultimately… success

TOOLS

• Personality Testing• Franchisee Testing• EQ Testing• Street Smart Testing• Franchise Engagement

Surveys• 360° Leadership Surveys• Compliance Hotlines

FINDINGS

• Franchisees with the right personalities reach desired performance levels 33% sooner than those without the right personalities

• Each franchise brand may require a different personality for their ideal candidate

Three case studies

PROBLEM STATEMENT:

Franchisees were dis-engaged

Revenues were down

The Brand had changed focus

Case Study # 1

Core Values, Communication & Sr. Management 2001-2004

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2001200220032004

2001 19 32 25 17 11 21 22 29 24 17

2002 70 68 79 78 73 75 76 90 66 71

2003 92 93 89 84 82 85 85 94 87 89

2004 92 94 91 86 83 85 85 95 86 90

I trust CarvelI believe Carvel

acts with integrity &

I enjoy my relationship with Carvel

Carvel solicits input from its Franchisees

Carvel considers

Franchisee's

Carvel keeps Franchisees well informed

Senior Management is

responsive

Senior Management is

friendly/

Senior Management is knowledgeable

I am satisfied with the

direction of the

ACTION PLANS:

• Hired 40 + people to support existing skeleton staff of 6

• Doubled the size of the franchise sales department

• Opened “Carvel College of Ice Cream Knowledge” Training Center for new franchisees

• Invested in proprietary systems for management of franchise system and franchise sales process

• Added 24 hour toll free hotline

• Tripled the number of field visits

• Added Design & Construction, PR, local marketing support

Disengaged employees:• Are less productive• Produce poorer quality products and services• Have more accidents• Generate more customer complaints• Miss more days of work• Cause us to lose clients and eventually $$$

If you can’t measure it…you can’t manage it.

Safe Working Conditions, Good Team, Competent Supervisor (setting goals, coaching, feedback, recognition, etc.), Tools & Equipment, Basic Skills Training, Feel Valued and Respected, Fair Treatment,

Enjoy the Work

Learning and Performance Development, Encouragement, Sense of Belonging, Cooperation Between Teams,

Personal Growth and Fulfillment, Adequate Pay and Benefits, Open Communication Channels, Pride in

Company and Products and Services

Customer Focus, Organizational Growth &

Success, Belief in Competitive Strategy, Product and Service Improvement, Value Diversity, Confidence in Sr. Leadership

Engaged Franchisees are 10 to 12 times more profitable than are their disengaged brethren.

Basic

Intermediate

Advanced

Master Franchisee Case Study:

Quick Lube market

Case Study # 2

PROBLEM STATEMENT:

Sales were flat and stagnant

Employee turnover was unacceptably high

Accidents and customer service errors were driving customers away

Low morale was effecting their few good employees

Management was experiencing difficulty staffing and managing their 14 locations

Franchisee Case Study

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Master Franchisee Case Study

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ACTION PLAN:• Replaced managers and employees

based on performance. Replacements were hired more on personality than on skills (18 months)

• Trained the right employees with the right concepts (deceased accidents and errors)

• Improved retention• Decreased turnover• Transitioned from operations-driven to

sales and service driven• Increased production to 1000 tickets/day• Increased ticket revenue by $6 per ticket• Generated additional $2,190,000 in

annual revenues without increasing fixed cost

• Franchisor received additional $100,000+ in annual royalties

Cost of 2 year implementation $20,000

©2003 The McQuaig Institute of Executive Development, Ltd.

® Registered Trade Mark of the McQuaig Institute of Executive Development Ltd., Toronto, Canada

COMPETITIVE

ACCEPTING

¡ Goal Oriented

¡ Likes taking risks

¡ Seeks Challenge

and Recognition

¡ Self confident

¡ Accommodating

¡ Team Player

¡ Avoids friction with others

DOMINANT SOCIABLE

ANALYTICAL

¡ People-Oriented

¡ Empathetic

¡ Relationship Builder

¡ warm, friendly

¡ Fact-Oriented

¡ Objective and Analytical

¡ Leans more towards

logic than emotions

¡ matter of fact, strictly

business

¡ tending to be terse or sparse

SOCIABLE

(style of communication)

RELAXED

DRIVING

¡ Easy going

¡ Patient and Steady

¡ Calm, even-paced

¡ Restless and Impatient

¡ High Sense of Urgency

¡ Likes Change

¡ Intense, driving

RELAXED

©2003 The McQuaig Institute of Executive Development, Ltd.® Registered Trade Mark of the McQuaig Institute of Executive Development Ltd., Toronto, Canada

CONSCIENTIOUS

INDEPENDENT

¡ Detailed-oriented & thorough

¡ Organized

¡ Systems-oriented

¡ By the Book

¡ Persistent and Determined

¡ Likes freedom of action

¡ Dislikes working within a

restrictive structure

¡ Independent

¡ Strong Willed

COMPLIANT

42 B A L A N C E

Humble Analytical Driving Strong Minded

Aggressive Extremely Persuasive Extremely Slow By The Book

Assertive Very Extroverted Unhurried Detail Oriented

Self-Starter Warm Calm and Patient Accurate

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DOMINANCE SOCIALIBILITY RELAXATION COMPLIANCE

STYL

E O

F C

OM

MU

NIC

ATI

ON

WO

RK

PAC

E

(The Generalist) (The Specialist)

Accommodating Reserved Impatient Casual

Very Accepting Critical Intense Non-conforming

ACCEPTING ANALYTICAL DRIVING INDEPENDENT

Generalist PersonalitiesTrailblazers Go-getters Managers Motivators

Specialist PersonalitiesAuthorities Collaborators Diplomats

DISTRIBUTION OF WS PROFILE TYPES YPO ENTREPRENEURS

Trailblazer18%

Motivator14%

Manager8%

Diplomat6%

Transition2%

Collaborator0%Authority

2%

Go-Getters50%

TOP 10 Franchisee/ Entrepreneurial Qualities

1. Patience2. Trust

3. Influence

4. Self-awareness

5. Strategic Vision

6. Accountability

7. Education8. Peer-to-Peer Learning

& Professional Coaching

9. Innovative vs. Creative

10. That Personality Stuff

CAPI

Authority Power

Influence

Dominance Dominance

Sociability

Authority: the legal right to make a decision to say yes or no

Power: the capability of granting or withholding rewards

Influence: the ability to convince others to do something without having to use power or authority. It is having a special knowledge to implement a specific task.

CAPI: the coalescence of authority, power and influence

Note: It is much easier reaching CAPI in younger more entrepreneurial companies because self interest in more aligned with company interest. It can become more difficult creating CAPI when self interest is different from company interest.

Franchise Case Study

Case Study # 3

PROBLEM STATEMENT:

Pareto’s law was in full effect

80% of results were coming from 20% of the franchisees

80% of problems were coming from 80% of the franchisees

Maintaining growth was becoming a challenge due to poor performing locations.

Action Items:

Surveyed the personalities of all Franchisees

Segmented personalities based on performance

Conducted a full scale Franchisee Engagement Survey

Created a behavioral benchmark of desired traits for future selection of franchisees

Trained existing franchisees utilizing the 5 Tier Performance Pyramid.

Ideal Executive

Group 1

Optimum Franchisee

Group 2Groups 3 & 4

Groups 5 & 6

Good Franchisee

Average Franchisee

Poor Franchisee

Engagement Survey of Leading Franchisor(Average Annual Franchisee Royalties)

$52,000 Optimum Profile

$24,000 Good Profile

$14,000 Average Profile

$6,500 Wrong Profile

Cost of 2 year implementation approximately $30,000

GAP

Climbing the Performance

Pyramid

Assessments

Define the Position

• Create behavioral performance benchmarks for all positions

• Who do I need to be to be successful

Bottom line_

People perform at higher levels:

Increased self-awareness, improved morale and retention, enhanced productivity….

. . . profits surge.

©2003 The McQuaig Institute of Executive Development, Ltd.

® Registered Trade Mark of the McQuaig Institute of Executive Development Ltd., Toronto, Canada

Assess the Incumbent

• Measure the behavioral attributes of the incumbent

• What are my strengths?

• What are my Developmental Considerations?

Gap Analysis

• Measure the difference between who I am and the requirements of the position.

• Determine the actions that support these required changes/ behaviors

• Predict the energy requirements or frustrations that are incumbent on making these changes.

Ace Hardware is in the process of awarding a $1,000,000 franchise location to a resident of the United States that has the best personality… for ACE.

Case Study # 4

ENTREPRENEURSLIVING THE DREAM!

www.liveloud.tv

Join Bill Wagner, author of The Entrepreneur Next Door,

as he interviews fast-track entrepreneurs for their tips on success.

Five STEPS To SUCCESS

Select

Train

Engage

Perform

Sustain

ACCORD MANAGEMENT SYSTEMS

But wait, there’s more!Name: ____________________________________Company: _________________________________Phone Number: _____________________________E-Mail Address: _____________________________Number of existing units: _____________________

Please check any of the items below to receive additional information:

___ Engagement SurveyAccord Management Systems, Inc, belongs to a survey consortium where we share millions of survey data points each year. We are in the process of creating high performing benchmarks to forty-five questions for the franchise community. Should you be interested in participating in this study of high performing companies then please complete this page.

___ Job SurveyShould you also like to complete a behavioral survey for the position of an Ideal Franchisee or other position please indicate below.

___ Word SurveyShould you like to take a personality test yourself please indicate that as well.

___ The Top 10 Entrepreneurial/Franchisee Qualities

NEXT STEPS & IMPLEMENTATION

Each and every one of our programs are completely customized and affordable. We coordinate your desired outcomes and always exceed the client’s

expectation by providing succinct, sustainable take home value.

PROGRAMS & OFFERINGS INCLUDE:PROGRAMS & OFFERINGS INCLUDE:

BEHAVIORAL IMPLEMENTATION & CERTIFICATION

EMPLOYEE ENGAGEMENT SURVEYS

SELF-DEVELOPMENT & ANALYSIS

EMPLOYEE COMPLIANCE HOTLINE

LEADERSHIP 360° ASSESSMENT

STRATEGIC TALENT TRIAGE

EXECUTIVE BRIEFING

ACCORD MANAGEMENT SYSTEMS, INC.Getting the People Side of Business Right

1459 Thousand Oaks Blvd. Bldg. G, Thousand Oaks, Ca 91362Phone: (805)230-2100 Fax: (805) 230-2186 info@accordsyst.com