My Loyal Employee Can’t Do the Job (Should I Promote Him?)

Summary

The EntreLeadership Podcast – Episode Summary

Episode Title: My Loyal Employee Can’t Do the Job (Should I Promote Him?)
Release Date: September 22, 2025
Host: Dave Ramsey (Ramsey Network)

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Episode Overview

In this episode, Dave Ramsey takes live calls from business leaders and owners wrestling with real questions about succession planning, compensation, tax strategy, leadership loneliness, and profit sharing. With his classic blend of no-nonsense advice, straight talk, and decades of experience, Dave delivers clear frameworks for making tough leadership decisions that position both people and businesses for long-term growth. Whether you're considering how to evaluate a loyal but underqualified employee for a higher role, looking for creative yet sensible ways to improve profit sharing, or simply searching for encouragement as a leader, this episode is a masterclass in practical wisdom.

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Key Discussion Points & Insights

1. Promoting a Loyal, Underqualified Employee

• Caller: Thomas from Greenville, SC (01:00–07:57)

• Issue: Succession planning—Can (and should) a long-term, loyal employee be trained up to succeed in a management role, or is it time to look elsewhere?

• Dave’s Approach:

  • Detail the Role Requirements: Write out expectations in explicit detail—even if it’s 10 pages.
  • Clear, Measurable Coaching: Go through 30-day sprints focused on critical skill areas (customer-facing presence, technical skills, attention to detail).
  • Progress, Not Perfection: Within 30 days, assess if the employee is demonstrating enough progress to indicate trainability within a year—perfection isn’t required during this period.
  • Address Personality and Style: Style matters only if it serves or hinders the role. If style prevents success, it requires coaching; lack of adaptation = lack of trainability.

• Notable Quotes:

  • “We’re not moving anyone into any slot in this company that can’t do the job just because they’ve hung around here a long time.” – Dave Ramsey (02:19)
  • “If the style is causing him to not be able to do the job, then he’s going to have to have a softer touch. I’m a hard charger, but there are times I need to have a soft touch—everyone does.” – Dave Ramsey (05:46)
  • “You can have people smarts from any style … Sometimes a soft touch, sometimes a pushy touch. Both are appropriate at different times, and that puts you in the right place.” – Dave Ramsey (07:25)

• Memorable Moment: Dave humorously underlines that “just the way I am” is not an excuse for harming team dynamics: “That’s not the way you are. You don’t want to do that. Style is not an excuse to not be able to do something.” (06:22)

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2. Small Business Tax Strategy & Cash Management

• Caller: Tyler from Jacksonville, FL (10:03–16:38)

• Issue: Profit spike led to tax exposure; should extra cash be used for business purchases (to lower taxes) or simply pay the bill?

• Dave’s Guidance:

  • Don’t Buy Stuff Just for the Write-Off: Only buy what the business truly needs, not just for tax avoidance.
  • Build Cash Reserves Over Unnecessarily Expanding: Focus on solid cash reserves—Tyler’s goal of three months’ expenses is sound.
  • Consider Personal Finances: If the owner is personally in debt, prioritize paying off debt (especially when the business is stable).
  • Reality Check on Tax: “Rich people pay a lot of taxes. The idea they don’t is a freaking joke.” (13:19)
  • Practical Advice: Use profits to pay off personal debt first; keep building reserves; and accept that paying taxes is part of business success.

• Notable Quotes:

  • “A tax write-off is a dollar trade for 30 cents. So you don’t buy stuff that you don’t need, okay, just to write it off.” – Dave Ramsey (10:45)
  • “I wouldn’t have retained earnings that large while I had 45k at home sitting there. I’d clear that.” – Dave Ramsey (14:06)
  • “That doesn’t help your taxes at all, but that’s a sidebar.” – Dave Ramsey (14:12)

• Memorable Moment: Dave’s encouragement about breaking the “seasonal dip” myth with pure hustle: “Momentum … and just cash flow can push you through those things.” (14:56)

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3. Combating Leadership Loneliness & Building Support Circles

• Listener Question: Derek from Texas (17:57–24:04)
• Issue: Emotional burden and isolation of leadership, especially at higher levels.
• Dave’s Wisdom:
  • Acknowledge the Loneliness: “The reason you feel like you’re carrying it all alone is because you’re carrying it all alone.” (17:57)
  • Find Peer Groups: Advisory groups with leaders at a similar level provide camaraderie, support, and shared learning.
  • Historical Example – The Eagles Group: Dave formed a long-running peer Bible study, which became an invaluable emotional and business support network.
  • Deliberately Surround Yourself With People Ahead of You: “You become who you hang around with, right?”
• Notable Quotes:
  • “It is heavy and it is lonely. And it is one of the prices of choosing to serve by being a leader, by owning and running something.” – Dave Ramsey (17:57)
  • “I wanted to be around people because you become who you hang around with, right?” – Dave Ramsey (Eagles Group context, ~20:00)
• Memorable Moment: Dave’s personal story of forming a group of local leaders for 14 years to combat isolation, both in business and life.

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4. Profit Sharing Structures for High-Performing Teams

• Caller: John from Sacramento, CA (24:04–35:40)
• Issue: Should consultants be paid with a profit-sharing scheme or stick to a salary? If so, how should it be structured?
• Dave’s Framework:
  • Incentives Matter: Profit-sharing reinforces both reward and recognition—it’s about incentive AND respect.
  • Keep the Formula Flexible: Don’t disclose the exact percentage or formula, as it will need tweaking for fairness and impact.
  • Add, Don’t Replace: Introduce profit sharing as a bonus, not as a replacement for salary.
  • Frequency & Communication: Share profits monthly (on the 15th each month for previous month’s results), with a public update so everyone understands the link between their actions and outcomes—but keep the actual numbers private.
  • Tenure as Factor: Primary factor in profit-sharing calculation is length of service but only because high performers stick around under his high-accountability culture.
• Notable Quotes:
  • “I would put the freaking receptionist on straight commission if I could figure out a way.” – Dave Ramsey (24:44)
  • “I’m not sharing it because someone is entitled to it. It’s my money. But I’m sharing it because … I believe in recognizing that the people that caused this place to run are as responsible for the profits as I am.” – Dave Ramsey (26:00)
  • “The beautiful thing about this whole conversation … is you can make it up and then you get to change it because nobody knows the formula.” – Dave Ramsey (27:49)
• Memorable Moment: The ritual: Each monthly staff meeting before payroll, the CFO announces profit direction (up or down), connecting actions to outcomes and rallying the team. (29:01–33:05)

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Timestamps for Major Segments

• [01:00–07:57] – Coaching a Loyal Employee for Promotion
• [10:03–16:38] – Managing Profitable Growth and Taxes in Small Business
• [17:57–24:04] – Leadership Loneliness: Staying Grounded and Supported
• [24:04–35:40] – Structuring Profit Sharing and Building Ownership Mentality

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Tone & Language

• Dave’s signature style is direct, practical, witty, and encouraging.
• He drops memorable one-liners, employs humor, and mixes tough love with genuine empathy.
• The advice is always actionable and rooted in his decades of hands-on leadership.

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For Listeners Who Missed the Episode

This episode offers a full tour through hard-but-necessary leadership territory: promoting the right people for the right reasons; aligning compensation with performance; handling the psychological load of leadership; and thoughtfully distributing the rewards of teamwork. Dave’s specific frameworks, stories, and tangible steps make the wisdom immediately applicable—regardless of your industry or business size.

“Better a wary warrior than a quivering critic. This world needs more high quality leaders, so take courage and lead.” – Dave Ramsey (35:40)

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Listen to more at: EntréLeadership Podcast

Transcript

[Dave Ramsey]

From the headquarters of Ramsey Solutions, this is Entree Leadership, where I take calls from leaders like you about what it takes to win at any stage of business and leadership. I'm Dave Ramsey, your host with over 30 years of experience leading in the trenches right alongside you. If you've got a question you want to ask on the show, fill out the [e-mail] or call and leave us a voicemail at 844-944-1070. That's 844-944-1090. Thomas is in Greenville, South Carolina. Hey Thomas, how are you?

[Caller (various callers including Thomas, John)]

I'm doing well. Thanks for taking my call.

[Dave Ramsey]

Sure. How can we help?

[Caller (various callers including Thomas, John)]

So I'm an operations manager for a manufacturing company in the electrical utilities business.

[Dave Ramsey]

And.

[Caller (various callers including Thomas, John)]

I am in the process of going through the succession planning and so my boss is planning to retire in the next couple of years and I'm looking to see who can take my spot. The guy that is underneath me that would be the natural fit has been here longer. He's got the tenure, but I don't know if he's got the technical skills and the attention to detail and customer facing presence that we need. And so I'm trying to figure out how can I figure out if I can train him or if we need to be looking for somebody else to fill that role.

[Dave Ramsey]

How long have you got?

[Caller (various callers including Thomas, John)]

At least a year. And then I'm going to move into another role and at that point I'll need backfilled.

[Dave Ramsey]

Okay. And well, I mean the things that you're asking him to learn to do, I would very, very clearly and in great detail write those out. Like if it's 10 pages even. Okay. And you know, then I'd sit down with him and give him that document and say, this is what it's going to take for you to be in this role. By your good work up to this point, you've earned the right to have a shot at this role. But the role is not going to be given to anyone unless they can do these things, regardless of who it is. So you're not gonna. We don't move, we're not moving anyone into any slot in this company that can't do the job just because they've hung around here a long time.

[Caller (various callers including Thomas, John)]

Yeah.

[Dave Ramsey]

Okay. And so the seniority doesn't matter in that sense. It doesn't guarantee that we move you to the level of incompetence. So you don't say that, but that's what's running through your head. Okay. Now, so anyway, you Cover with him exactly what it would be and go. Okay. For the next 30 days, I want to work with you on these three different areas. And I need to see something demonstrated that you can do these three areas. And I'm gonna put you in places where you have the opportunity to show that you are learning to do these three things at a degree higher than you're able to do them today. You've gotta get better at all three of these things to get this role and I wanna help you get there. So this is called training you up so you get the job, in other words. And this is you just talking to, talking to, giving him the reality of the situation. It's not a threat, it's I'm here to help you. I want you to get this, I want you to win, and here's what winning looks like. And I'm gonna help you work on adding these tools to your tool belt. During the next 30 days, I need to see some substantial progress when I put you in these meaningful situations. I'm gonna put you in a customer facing situation, I'm gonna coach you through what to do, then I'm gonna watch you do it and then I'm gonna help you afterwards. And then we're gonna do it again and I'm gonna put you in a detail oriented situation and I'm gonna need you to flesh through the details. I'll show you how to do it and then I want you to do it the way I did it and I watch you do it and to see if you're really catching on. And so it was customer facing, detail orientation. What was the other thing?

[Caller (various callers including Thomas, John)]

Let's see customers attention, detail and just technical. So the, the technical apparatus of what we do.

[Dave Ramsey]

Okay, so there's a way to put him in that same situation to see if he can function in that. But obviously someone told you how to do it, so you're going to tell him how to do it and then see if he can do it. And obviously too on all three of these things in 30 days we're not gonna expect perfection or completion, but we need to see progress. Which answers the question is do you have the capacity to get there if I work with you for a year? And during this 30 days we're gonna figure that out. That's you and I mean that's me and you talking. That's not him. But I mean I'm gonna put him in all kinds of situations. And the test is not to see can he do the job completely in 30 days because I don't think he can. I think anybody could do that in 30 days, but can he make enough progress that makes you believe he could get there in a year?

[Caller (various callers including Thomas, John)]

Okay. And we, he and I have very different personalities, and it plays well in our production role, but he's. He's a little bit more of a hard charger, but to fill my position, he's got to have a little bit more softer touch. How do I coach him through that or how much do I just accept, hey, this is part of who he is, and if I'm going to move him here, just, he's not going to do it the same way I did it.

[Dave Ramsey]

Well, to the extent that his style is causing him to not be able to do the job, then he's going to have to have a softer touch. I'm a hard charger, but there are times I need to have a soft touch and I have to have that ability.

[Caller (various callers including Thomas, John)]

Okay.

[Dave Ramsey]

And you do, and you have a natural soft touch. But there's times you have to be a hard charger.

[Caller (various callers including Thomas, John)]

Yeah.

[Dave Ramsey]

So you step up into that, and that's just maturity within your style. But, you know, if he's gonna make people mad and calls that his style, that's not a style. That's just a lack of awareness.

[Caller (various callers including Thomas, John)]

Yeah.

[Dave Ramsey]

You know, so that, you know, you can't. Well, that's just the way I am. No, it's being an idiot. That's not the way you are. You don't want to do that. So, you know, that's the thing. So. No, that's. That's. But I. I think you take into consideration the style differences. But if the style is not an excuse to not be able to do something.

[Caller (various callers including Thomas, John)]

Okay.

[Dave Ramsey]

Okay. And if. If it is. If it is. If it keeps him. If it's so ingrained and it's. It keeps him from being able to do this position, then you're just going to have to tell him that.

[Caller (various callers including Thomas, John)]

Yeah.

[Dave Ramsey]

You know, that means he's not trainable, in other words. So. Yeah, I can. We all can adapt to a situation that needs to be, you know, that use wisdom instead of style and. Yeah, so style explains, you know, how things can go sideways, but also explains my natural tendencies.

[Caller (various callers including Thomas, John)]

But.

[Dave Ramsey]

But it doesn't explain a lack of people smarts. You can have people smarts from any style, and sometimes a soft touch, sometimes a pushy touch. Both of those are appropriate at different times, and that puts you in the right place. So. Yeah, that's good question. Thomas, you got a good head on your shoulders. You've really thought this through. You're doing a great job. I got a feeling you're able to train this guy. I just got a feeling this is going to work. Thanks for calling.

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[Dave Ramsey]

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[Caller (Tyler)]

Hey Dave, it's pleasure talking to you. How are you doing?

[Dave Ramsey]

Better than I deserve. How can I help?

[Caller (Tyler)]

Do I own a moving company just outside of Jacksonville, Florida and do about 1.9 million last year with 17 employees roughly. And my question for you today is we are having a rather profitable year this year compared to last year. About a roughly 12 to 15% difference net profit and increase of course. And that being said, I'm trying to figure out some different avenues that I might Be like that I might should consider to decrease my tax liability or should I just bite the bullet and pay the tax bill?

[Dave Ramsey]

Problem with making more money, you know, you got a tax problem now. So because you got an income, because your income's awesome, okay, Rule number one is don't buy stupid stuff you don't need just to save on taxes. Because if you get a $10,000 write off or $100,000 write off on something that you didn't need, your only tax benefit, it only saves you about $30,000 in taxes. And so, you know, a tax write off is a dollar trade for 30 cents. So you don't buy stuff that you don't need, okay, just to write it off. And you don't do things with money that you shouldn't be doing just to get a write off. So if tax is your only motivator, you'll usually make a dumb decision. I've tried that myself a time or two. So the second thing then is get with your tax professional and have them walk you through what you're able to do with depreciation under the big beautiful bill this year in 25, not in 24, but in 25, you're going to be able to write off a bunch of stuff in a single year that you used to have to depreciate. And so if you need some equipment, you know, and you've got the cash for the equipment and the equipment is going to roi well, you'll be able to get a huge write off for it in this calendar year. And again, you won't see the benefit of it tax wise until you file after the first of the year. But that's the thing. So anyway, get with your tax accountant and figure that out. Is there any actual, I mean, you're in the moving business, so trucks come to mind or you know, forklifts come to mind or whatever, I don't know, whatever other pieces of equipment you use. Is there anything that, that since you're sitting on some cash from some extra profits, it's been a banner year. Do we need to move on up in equipment to increase our profits even more next year?

[Caller (Tyler)]

Well, yeah, that's the dilemma that I'm in is because this year was, the goal was to stack cash last year we found ourselves in a little bit of a cash pinch to where we had pretty much a two week Runway. And so this year we're much better off and in a much better position cash wise.

[Dave Ramsey]

But how much cash are you sitting on?

[Caller (Tyler)]

About 150 right now. Goal is about 350, which would be three months of expenses.

[Dave Ramsey]

Okay. Okay, cool. All right, well, then we're just building the emergency fund and your retained earnings, and you're just going to pay taxes on it.

[Caller (various callers including Thomas, John)]

Okay.

[Dave Ramsey]

There's not a mystical thing that this idea that rich people don't pay taxes is a freaking joke. Rich people pay a lot of taxes.

[Caller (Tyler)]

Right, Right. Well, my CPA had even mentioned to doing, you know, doing the Roth RA and doing a 401k and sending up, but I didn't feel like cutting off my own hands to the cash, especially considering in our personal lives, my wife and I are still on baby step two. So we're not quite ready for that step in that. In the process.

[Dave Ramsey]

You're in baby step two, and you've stacked 150k in the business that you own 100% of.

[Caller (Tyler)]

Yes, sir. Yeah.

[Dave Ramsey]

What's it take to pay off your personal debt?

[Caller (Tyler)]

About 45.

[Dave Ramsey]

Oh, I'd do that today.

[Caller (Tyler)]

Okay.

[Dave Ramsey]

I wouldn't have retained earnings that large While I had 45k at home sitting there. I'd clear that.

[Caller (Tyler)]

Even with.

[Dave Ramsey]

That doesn't help your taxes at all. But that's a sidebar.

[Caller (Tyler)]

Right. Even with the seasonal business that we are. Like, we're about to head into winter season, which is just naturally and historically slower for the moving industry.

[Caller (various callers including Thomas, John)]

Yeah.

[Dave Ramsey]

But you break even during those months, you just don't make a lot of profit.

[Caller (Tyler)]

Sure.

[Caller (various callers including Thomas, John)]

True. Okay.

[Dave Ramsey]

You're not. You're not gonna. You're not gonna need the cash to survive during those times.

[Caller (Tyler)]

Yeah, you're right.

[Caller (various callers including Thomas, John)]

Yeah.

[Dave Ramsey]

Yeah.

[Caller (various callers including Thomas, John)]

Okay. Yeah.

[Dave Ramsey]

Because you're. You've got this thing rolling. And by the way, you may have it rolling hard enough that it rolls right through that season, too. You may have. If you jam that pipeline up good and full and you just work it, keep working like you're like a maniac, like you have been. You may see that seasonality not be as extreme.

[Caller (Tyler)]

Okay.

[Dave Ramsey]

We've experienced that in some of our areas where we used to have more severe dips than we do today. And the seasonality didn't really change. We just built up such a wave of business that it runs all the way through there. And we hardly realized that we went through a season change. And that's not always true, but momentum, in other words, and just cash flow can push you through those things and availability. So, no, you're probably not ready to buy. I did all that whole thing on equipment, and you're probably not ready do that. I'd pay off 45. I'd sit on the rest of it and I'd pay my taxes if I were in your shoes. And that's the problem with a sub S or an LLC or a sole proprietorship. Any money we try to keep in the business we have to pay taxes on because it's profit. And so when Washington says we love small businesses, we want to help small businesses, they lie. Because that's an unfair tax code that I hold money in my retained earnings in my business. I didn't take it home, I didn't spend it, I didn't do anything. It's sitting here for survival purposes and for prospering purposes, but I have to pay tax on it for it to sit there. And so anyway, that's what you're looking at. I would just pay my taxes in this and I'd pay off the 45,000 a day that made your wife happy today.

[Caller (various callers including Thomas, John)]

That's pretty cool. Cool.

[Dave Ramsey]

She's gonna My husband just bonused himself 45k and we're we're out of debt.

[Caller (various callers including Thomas, John)]

Woohoo.

[Dave Ramsey]

We're debt free.

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[Dave Ramsey]

Derek in Texas says Dave. One thing I didn't expect when I started my business was how lonely leadership can feel. The weight of decisions, the pressure to protect the culture, and the lack of peers who really understand it can get Heavy. How did you stay grounded and connected when you were building Ramsey Solutions in the other early days? And what advice would you give to leaders who feel like they're carrying it all alone? Well, Derek, the reason you feel like you're carrying it all alone is because you're carrying it all alone. That's why it feels that way. And it is heavy and it is lonely. And it is one of the prices of choosing to serve by being a leader, by owning and running something and serving others. It goes with a territory. How did I deal with it in the early days? Well, today the way I deal with it is I have a wonderful team around me here. And so it's not lonely because my leadership team is very mature, very sophisticated, very smart, and we're all there for each other inside the building. What I did in the early days was I would recommend you do something like get to entree leadership and get in one of the advisory groups. The advisory groups are. It's a group coaching thing. And we put you in with companies your size in industries like yours. And so there's eight or 10 leaders in the group together, and they're sharing problems, emotions, ideas, milestones, celebrations. And so there's a group that you are now part of, and they're just like you, and they're in it for the exact same reasons that you're there. They want information and inspiration and accountability. And they don't want to be lonely. And so the advisory groups would be my first choice for you. The thing I did, I did not have a thing like an advisory group available to me. At least if I did, I didn't know about it. What I did is I just got on the email and I emailed some business leaders and ministry leaders in the area and asked if they wanted to do a weekly Bible study together. And it's not something I'm teaching, it's something we together are doing. Cause these were all guys that were doing as much business as I was doing, or more like. I mean, I was doing 50 million or something. And I wanted somebody in the room that was doing 100 or 200 million because they think different. And I wanted that. I wanted to be around people because you become who you hang around with, right? And so we called it the Eagles Group. And we met every Wednesday morning for 14 years, all the way through my 30s, up into my 40s, and discussed a lot of business things in there, but a lot of life things. A lot of spiritual discussion about our faith. Obviously, it was started as a Bible study. And we Had a lot of discussions about relationships, marriage, family, kids. We went through a lot of stuff in 14 years together and it was a great group of men. And a couple of them have passed away since then. One while we were in the group and we've lost at least one more, maybe more from the old days. But that group disbanded after 14 years. It had run its course and I put together another group of guys much less serious. Just a bunch of goof offs. But at least I'm hanging out with somebody. They're good men. They're men that read. We have great discussions on books and that group has been together almost 14 years now. So I think it's important to force yourself into groups of people that are at or beyond where you are. And that way because, I mean, I'm in plenty of situations where I'm in a group and I'm the teacher and I'm trying to help people get to where we are. That's different. But you're talking about something where you are fed as a leader and your loneliness is solved because you've got a place to offload some of the bull crap that we all go through when we're doing choosing to run a business like this. So that's where it goes from that. So, hey, that's a cool question and it's a very vulnerable and accurate question. I'm glad you're asking it again. My first choice for you would be joining an advisory group in entree leadership. Not just because it's something we sell, but because it does actually answer the need that you have. If you're working 60 to 70 hours a week just to keep your business running, you're headed for burnout. The only way to grow without running on empty is to stop working in your business and start working on your business. And that takes advice and accountability from people who actually make payroll. That's why you need to join an advisory group. You'll get a coach and a circle of business owners like you who will help you stay focused and grow without sacrificing your nights and weekends. Find out if advisory groups are right for you at entreeleadership.com/advisory groups or click the link in the show Notes if you're listening on YouTube or podcast. Guys, if you'll help us out, we would appreciate it by following the show. Click the Follow button, click the share button, the subscribe button. Share the show. Tell people about the show. Hang out with us, guys. Let people know we're here. You're our only marketing, so you're we have no chance. If you don't help us, we're going to go down in flames. I'm kidding. But I mean any growth that we have, and we've had a bunch of it, is due to you folks helping us out and leaving the five star review, clicking the share button, cutting the link and sending to somebody say, hey listen, this crazy guy on business, he's actually helping me out. We appreciate it when you do that. Thank you. John's in Sacramento, California. Hey John, what's up?

[Caller (various callers including Thomas, John)]

Life is good, Dave. How are you doing?

[Dave Ramsey]

Better than I deserve. How can I help?

[Caller (various callers including Thomas, John)]

So I am the owner, operator of a consulting firm. We have nine full time employees. We bring in about 3.8 million a year. We have zero debt and a year's worth of operating expenses in the bank.

[Dave Ramsey]

Wow.

[Caller (various callers including Thomas, John)]

My question today is, would it be beneficial to start paying our consultants as a percentage of profits or continue moving on, paying them just a nice salary, which we have done forever. If so, kind of. What's the structure of that profit sharing plan?

[Dave Ramsey]

Well, the good news is you've done so well that you can afford to try something different without doing huge damage. And congratulations, your financials are amazing. The I grew up in a straight commission household. Mom and daddy were in the real estate business and, and I've either owned a business or been straight commission all but three months of my life. Okay, so that, that taints the answer. That's why I'm telling you that, because I would put the freaking receptionist on straight commission if I could figure out a way, right? I put everybo on, hey, you eat what you kill and so go kill a bunch and get really, really fat. I mean, come on, you know, that's, that, that's, I love that mentality. I like the incentive around that you live that way because you don't, if you don't make a profit there running this business, which is, you know, you don't get to eat. And so you're, you're on straight commission as the owner of this place. So I like what that does to people's get up and go. Some people are more motivated by upside potential than others money. They're more money motivated than others. You might be shocked as to which ones it lights up and which ones it doesn't. So from an incentive standpoint, I like sharing. I also like sharing because I am very aware that we don't do $300 million worth of revenue here at Ramsey because of me, by myself. I'm very aware I've got a lot of good Help getting there. And so I like just the concept. It's one of our core values that we share the profits. And that is a way of tipping our hat and saying, I didn't do this by myself. You helped. You helped get us here. And the more you help get us here, the more you're going to make. And so. But I, you know, I'm not sharing it because someone is entitled to it. It's my money. But I'm sharing it because A, I believe in incentives, and B, I believe in recognizing that the people that caused this place to run are as responsible for the profits as I am. And so you didn't do it by yourself kind of thing. And takes.

[Caller (various callers including Thomas, John)]

Yeah.

[Dave Ramsey]

So those are my reasons for doing it. And then you ask about structure and so forth. The good news about structure is you can just make it up. I recommend keeping the formula private because I'm going to change it. Because it's probably not going to work the first time you do it.

[Caller (various callers including Thomas, John)]

Yeah. And that's something I'm. I kind of struggle with. Of. Because to me, it seems like they should know their percentage going into the year somewhat.

[Dave Ramsey]

Nope.

[Caller (various callers including Thomas, John)]

Rather than no. Okay.

[Dave Ramsey]

Because I'm going to change the percentage and I'm just going to tell them that I'm going to start allocating a percentage of our profits to share with you all. But I'm not going to tell you what the percentage is because I'm probably going to change it. I may make it more percentage. I may make it less percentage depending on how all this works. I want it to be noticeable and significant enough that it motivates you to help me make more profit. So it's not gonna be $5. And if it ends up being $5, I got the wrong percentage. I need to change the percentage. And this is new to me, so I'm trying it new. So I'm gonna move. I'm gonna monkey with this as we go along to your benefit. Because if it's too big, I'll quit doing it. You don't want me do that. And if it's too small, you won't notice it and I'll quit doing it. You don't want me to do that. So I've got to put some numbers in here and I've got to play with this. So I would leave everyone's pay exactly as it is and just put this as extra gravy on the biscuit. I wouldn't cut their pay. I wouldn't restructure their comp.

[Caller (various callers including Thomas, John)]

Gotcha.

[Dave Ramsey]

This is just Extra money. This is just you, out of the goodness of your heart, sharing part of your company with them, with the team.

[Caller (various callers including Thomas, John)]

Yeah. Yeah. I'm hoping it kind of makes them start thinking of thinking like an owner somewhat, you know, thinking about efficiency, how to grow. Where's, you know, where can we get better?

[Dave Ramsey]

Yep. Here's what we did to do that. We put ours monthly and we pay it out on the 15th of the month following. And so if you're looking at whatever month, we'll make up a month. August. Okay. If we did really well in August, the payout will be September 15th. So we get to close the books on August. We know exactly what happened in August. The accounts receivables are in or they're not in. The accounts payables are all paid. So there's no mystery about it in terms of me and the CFO looking at it. And then we look at it and we say, okay, based on this, here's what our profit sharing formula tells us we're gonna pay out to the team. And it's this percentage of profits. And then you come up with a formula on how you're gonna pay it to the team. I'll come to that in a minute. Then we started doing it monthly, and then we also started doing what you were talking about wisely a moment ago at the staff meeting. Right before payroll, we have a company wide staff meeting every Monday. And right before the 15th payroll, our CFO gets on stage and puts up a little chart that says, okay, profits are up 4% over last month. Profits are down for the year over last year. Profits are, you know, and we give them some measure. We don't tell them a dollar amount, but we just go, okay, they're up 4%. They're down 4%. And we also have added two team members to the profit sharing that were not in it. So that dilutes it. So you got an arrow up, an arrow up, but you got an arrow down because they diluted it. Because we had more people in the thing, because we've hired more people and, you know, they started qualifying. I think we have to wait a year before 90 days before they get in. Something like that here. I forget how we're doing it 90 days now. Okay, it used to be a year, now we've backed it down to 90 days. That's one of the things we changed. So anyway, we explained to them all that, and then we go, okay, so really the essence of this is that this department had a good month, and this department had a good month and this department had a good month. And some of the departments that have done really well, they appreciate those onstage shout outs, that they're the pro. They're the reason we got these profits this month. And so everybody gets to clap on that. And then he closes it every month that says profits happen when revenues go and the whole team says up. And when expenses go and the whole team says down. That's your reminder that all of you in this room, boys and girls, are self employed ultimately. And if you'll help us get revenues up and profits down, these checks are bigger. It's a simple formula. And we announce that every single month. If you've been here 15 years, you have heard that 52 times a year for 15 years. No, no, I'm sorry. 12 times once a month, 12 times a year for 15 years. You've heard it over and over and over. So it's drilled into your head that profits don't just magically appear from some corporate fairy dust. Profits happen when you people in this room drive revenues up. And you people in this room do efficiencies and drive revenues down, expenses down.

[Caller (various callers including Thomas, John)]

So you're telling them directionally, but you're not, you're not really giving them any formulation, any real specifics.

[Dave Ramsey]

No, because I'm not trying to get them to know what the profits of the company are. Those are not disclosed here.

[Caller (Tyler)]

Okay.

[Caller (various callers including Thomas, John)]

Yep.

[Dave Ramsey]

We disclose our revenues, our top line revenues, but we do not disclose our profits to anyone except our top leadership team and obviously our financial team.

[Caller (various callers including Thomas, John)]

Got it, Got it, Got it.

[Dave Ramsey]

Because. Because here's the thing. People can't. They can't get their head around the number that size and how it relates to them. Too many of them, they struggle with the emotional maturity part of that. So there's just no point. That's not the purpose of this. The purpose of this, not to create a math riddle for the team, the purpose of this is to say, if we all work together, we make more money. I'm going to share some of it. You're going to benefit, not just your pay, but you're also going to get this over here. So this is. We're a small company. We don't have stock options, we're not publicly traded. And so this is your version of that. You get some of the money that's mine if we all work together and we make more money. And so everybody gets real happy because some of those checks get substantial. Now, one last thing. How did we derive the formula? We've been through several versions. And you could do Whatever you want. The beautiful thing about this whole conversation, John, is you can make it up and then you get to change it because nobody knows the formula. So ours, when we first put it together, I resisted paying out based on how long someone had been here because I don't like seniority, that if you just hang around, breathe air, that makes you. That makes you more money. Okay. But then I, over the, over a period of time, I came to realize that we are so tough on accountability for performance here that you don't get to stay here 10 years unless you're killing it and you're growing and you're getting better, you know, you're getting better at your craft all the time and we don't keep you. And so we don't have any people sitting around going, well, I'm entitled just because I've been here 10 years. None of our tenure or 20 year people think that way. They think they're in warrior mode all the time or they didn't make it at Ramsey that long. Now, I don't know the culture you're in, but. So we came to realize that the primary part of our formula that we were okay with, and I'll tell you how we did it, was length of service. So someone that's been here 10 years, their profit sharing check, if they're in the exact same job as someone sitting next to them that's been here one year, their profit sharing check's substantially different.

[Caller (various callers including Thomas, John)]

Got it.

[Dave Ramsey]

Because they've been here.

[Caller (various callers including Thomas, John)]

That makes sense. I mean, we're working our butt off. So, yeah, we're very similar. You're not around unless you're a superstar.

[Dave Ramsey]

Exactly. Now how we did that was we pulled names of people who were going to qualify for the plan. And so I had a picture in my mind, okay. And I pulled a name up of somebody that had been here 10 years, and I pulled a name up of somebody been here one year. And we ran the math formula through that, the percentage of profits of the company, and then we applied it to how they were going to be distributed among the different times they've been here. And when we looked at it, the gut check, it felt wrong. Like the one year person was getting almost as much as the ten year person. And that felt wrong to us. And so we changed the math and then we ran the formula again. And then the 10 year person's getting a bigger check than the one year, enough that you can feel it and see it. And you go, that rewards someone sticking around here that's doing great work and is a champion, like you said. So we ran the numbers and said, how does that feel with some sample cases? Somebody one year, somebody 10 years. Somebody made a lot of money. Somebody didn't make a lot of money. And we ran, you know, whatever formula you're going to use for distribution of the profits, we do not distribute them evenly. It's not simply divided by the number of people in the thing. Okay. It has changed by the amount of time. And the primary factor mathematically today is how long they've been here. Because that's the one. We got that person's picture, we put it on the screen and we're like, that's what they get paid. And this other person's picture is what they're gonna get paid out of this chunk of money. And does that feel right? And two or three of us are sitting in there leaders. And we went, yeah, finally. That feels right. Okay, now we got a math formula. But then if it quits feeling right at some point, we change the formula again. Right? Because nobody knows the formula, so nobody's gonna get pissed off or. We didn't break a promise. You promised us 12% of the profits, and now you're only giving us 11.4, you know, and nobody knows that number, so they can't get all huffy about it. It's just simply me sharing. And so that's a. That's a lot, a lot, a lot, a lot on that. But that's. That's. It's a question. We get a lot in entree leadership and so in the small groups and in the event Q and A time. So that's why I kind of went off on it. Maybe gave you more than you wanted. But I was also thinking about the other folks listening. A lot of people want to do this, so. And I love your question, especially in context of how well you have done financially. I'm so proud of you. Very cool. You absolutely have killed it, man. Absolutely incredible. Very well done, folks. Remember, better a wary warrior than a quivering critic. This world needs more high quality leaders, so take courage and lead. I'm Dave Ramsey, your host. Thanks for joining us on entree leadership.