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I hate to ask you this but...

I hate to ask you this but...

November 30, 2011

Recently, I got a chance to visit with my client and friend, Nick Sarillo (left), and I was blown away at how he's created what I call a "Compelling Company" not just for his customers, but for employees!

Let me ask you a tough question.

I’ll warn you now you may not like the answer.

Here it is: Would you want to work in your business? As the leader in your business, let’s face it, you have to be there. But what if you weren’t running the show? Would you still want to work there?

I was amazed recently when I went to visit one of our clients who has built a business that he describes as one in which he’s always wanted to work. So do a lot of people. In fact, he gets as many as 50 applications a weekend from people fighting to work there.

It’s no wonder. Because this pizza restaurant outside Chicago is what I call a “Compelling Company.” It’s compelling for the owners, the customers and the employees. It’s unlike anything you may have seen and it’s based on the same management concepts that are also used in nuclear power plants, on aircraft carriers and firefighter crews.

It’s a great success story that will blow your mind, let me share with you some counter intuitive insights …

Located about 30 miles Northwest of Chicago, you’ll find Nick’s Pizza & Pub Restaurant in Elgin, IL and about 10 miles north of Elgin you’ll find another Nick’s Pizza & Pub in Crystal Lake where Nick Sarillo has created a business that is truly one-of-a-kind in the ultra-competitive world of pizza restaurants.

He’s so successful, the restaurant was recently on the cover of Inc. Magazine and named among the Top 10 busiest independent pizza restaurants in the U.S. by Pizza Today Magazine. Not bad in a place where 17-year-olds can call the shots, every employee knows what everyone else earns, servers talk about working towards a “greater purpose,” staff can choose their own career paths and there are no supervisors.

I’m sure you’ve heard of self-managed teams. But imagine trying to run an entire business using self-managed teams? Fire fighters do it every day. So do nuclear power plant operators and crews on aircraft carriers – often in do or die situations, according to Karl E. Weick and Kathleen M. Sutcliffe, who wrote Managing the Unexpected: Resilient Performance in an Age of Uncertainty, a book Nick credits for providing him the roadmap he needed to build a high-performing organization.

Guiding every decision at Nick's Pizza & Pub is the company's purpose and values that are on display for everyone -- customers and employees -- to see wherever they go in the restaurant.

How did he do it? By providing clear direction, training and trusting employees to make the right decisions when needed. And what’s amazing is that just about any company in any industry can follow Nick’s formula.

As a result, he spends very little time managing people. They do that themselves. Instead, he can focus on working on the business – not in it.

There are several secrets I learned. First, it all starts with a clear purpose and expectations.

Throughout the restaurant and on its website, you can’t help but notice Nick’s purpose statement and values. Its purpose?

Our dedicated family provides this community an unforgettable place; to connect with your family and friends, to have fun and to feel at home!

And its values are clearly on display. Here are just a few:

  • We treat everyone with dignity and respect.
  • We are dedicated to the learning, teaching and ongoing development of each other.
  • We have fun while we work!
  • We communicate openly, clearly and honestly.
  • Health: We are a profitable and fiscally responsible company. We support the physical and emotional well-being of our guests and team members.

So serious is Nick about upholding the purpose and values that it’s the first thing job candidates are exposed to in an interview. The cover sheet to its application package includes the purpose and values. He asks candidates: “What stood out for you when you read the cover sheet?”

He’s looking for candidates who can tell him specifically which values resonate with them. “If they don’t have anything specific, that’s a red flag,” he says. Your interviews should push and pull candidates so they “pull” in the people you want most and “push” away the people you don’t want.

No matter what the job is, everyone shares the same purpose and values. “The team feels there’s a bigger purpose for them whether it’s washing dishes or serving drinks or making pizzas,” Nick says.

As part of the company's open-book management philosophy, all employees have complete access to the P&L in its weekly "huddles" where they can even "own" a line item if they see an opportunity where they can increase revenue or cut costs.

It could be one of the reasons why employee turnover is less than 20% -- about 5 to 7 times LESS than the industry average which varies between 100%-150% depending on the economy. Or it could because every employee has the opportunity to “own” a part of the P&L.

Each week, the team gathers together in “huddles” where Nick posts the P&L as part of his open-book management philosophy. Team members can own any line item. If a 17-year-old cook has any idea for how they can increase dining room sales he can post his own forecast and explain how he thinks the team can achieve the goal. The restaurant’s recent promotion offering half-price pizzas on Mondays and Tuesdays, which increased sales 10%, was born out of a huddle.

Team members are expected to deliver on their forecast and if they don’t they have to explain why and what they will do differently next time. If it’s successful, the team celebrates. There are no bonuses or rewards offered. The combination of peer pressure and the opportunity to share in the success “oddly enough works pretty well,” Nick says.

Also guiding employees are very clear processes and systems.

To make sure every job gets done -- and gets done correctly, Nick Sarillo created cards for every position in the company with a checklist of the tasks that must be performed. Servers have checklists for example that show exactly what they must do before the leave at night. When they do, the cards are flipped over so the red side is facing out clearly illustrating to the team that the work is completed before closing out.

Every employee has a list of responsibilities that must be completed before they clock out. Those responsibilities are listed on a card that’s color-coded green on one side and red on the other. When the assignments are completed, employees turn over their card so the red side is facing out and they can check out. It’s a terrific way to ensure the work gets done – and gets done correctly.

Every job and every task in the restaurant is carefully scripted too.

What’s interesting is that employees can choose the jobs they want to do – and ultimately their own career path – as long as they’re trained to do the job. If you were to put a gun to Nick’s head and ask, “What’s the single MOST important thing that the employees really resonate with?” he would tell it’s the path of ascension. Employees know where they are and they have a clear path to grow and obtain both personal and professional mastery.

If they start out as a pizza maker they can become certified to roll dough after completing training. They can become certified to make salads following a separate training. There’s a certification required for making sandwiches. And if they want to be a trainer, they must be certified for that too. With every certification, an employee gets about a $1 increase.

If you were to put a gun to Nick's head, he'd tell you the most important thing that resonates with employees is the clear path of ascension they can follow to be promoted within the company. The top picture shows the 3 levels of employees and the certification requirements that are needed. Below it, lists all the employees and the various certifications they've achieved. Notice that EVERYONE is a pizza maker -- even the accountant!

“Rookie” employees where tan hats. Once an employee gets at least 3 certifications, he’s considered a “pro” and can swap a tan hat for a red one. And after 3 more certifications he can graduate to “expert” and don the highly prized black hat. Team members turn to their trainers – not the managers – any time they need help because there are far fewer managers.

There are only five managers in the 2 restaurants and the last thing he wants are employees asking permission from managers. Instead managers serve as coaches.

And that he admits is the biggest hurdle to self-management teams in any organization.

“The only challenge is owners and managers. A lot of owners and managers want to be the boss. The challenge is letting go of your ego and trust your employees,” Nick says.

To help you and your managers “let go” and give more authority to your employees here are 4 questions to ask yourself:

  • What questions can you ask your job candidates in the interview to ensure they share your organizations purpose and values?
  • How can you encourage more innovative solutions from your employees? What information will you need to share? How can you get employees to take the next step and “own” that idea?
  • What jobs and tasks should be scripted in your organization to ensure they get done – and done correctly?
  • What additional training does your staff need and how can you encourage them to learn new skills?
  • How can you encourage members of the team to support and train themselves?

You can see why I was so impressed. But that’s just part of the story. Join me next week as I share the secrets to how Nick has created a Compelling Company for his customers too. You won’t want to miss it!

Always taking you from where you are to where you want to go,


Jon Goldman, President & CEO
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