We Ranked Every Employee—Here’s What Happened!

[00:00:00] Dane Sanders: What is it that contributes to someone being a key employee, somebody that you couldn't live without in Seth Godin language, the linchpin that you just makes the biggest difference. And we started coming up with some very customized ideas on how we view individuals subjectively, objectively and also how they view us.

[00:00:18] Richard Gaffin: Hey folks. Welcome to the Ecommerce Playbook Podcast. I'm your host, Richard Gaffin, Director of Digital Product Strategy here at Common Thread Collective, and I'm joined today by a very special guest. He is our, and I have to read this off a sheet here, VP of Employee Development and Performance here at Common Thread Collective, Mr. Dane Sanders.

He's worn many hats in our organization, but this is the one he's wearing now. Dan, what's going on, man?

[00:00:41] Dane Sanders: Richard, I am so glad to be here. If for no other reason than you and I can chat at a reasonable volume without

Taylor on the line, it's, it's,

it's, 

[00:00:51] Richard Gaffin: Yeah. Happy, happy to provide that for you. 

Yeah, so I think part of what we wanna talk about today, and I know you've had a conversation in the past with Taylor, speaking of Taylor, 

about some of the topics we're gonna hit today. But I think what we wanted to, or, or the way I wanna frame this conversation up is the conversations that Taylor and I have around.

Tactical execution. So that, that, those are most of the, the conversations that we have the solution or, or rather, the method by which you attain some of those tactical executions is by, is via organizational excellence. 

So maybe a better way of saying that is you can't really do anything what we're talking about unless you have an organ, an organization that is built to actually accomplish that task.

And so that's part of the reason we wanted to bring on and actually speak to some of the. Really transformational changes that we've seen over the last few years here at Common Thread Collective that are due essentially to us changing up the way we think about the organization, the way we think about people.

So, I want to kick the conversation off with you, Dane maybe recapping a little bit of what you talked about with Taylor around a fundamental shift like I was alluding to, that needed to happen here at CTC around say, 2022. So talk to us about. What the kind of organization was like before and what we identified as problems and what we shifted it to.

[00:02:09] Dane Sanders: Yeah, you know, I was, I was making fun of Taylor's passion a moment ago. And but the, the truth is as a leader, Taylor is extraordinarily courageous and I've seen it. I. Year in, year out, I've had a chance to, to your point earlier, be around CTC in a lot of different seasons as it's matured as an organization. But it was sometime, you know, 2020 coming outta Covid, leading in all the way to 2022. D two c e-commerce was thrilling until it wasn't, and all of a sudden, 2022 all the different dynamics on a macro economic level as well as privacy shifts around. People's digital devices in their pockets and and just kind of people coming out from being locked in doors for the better part of two years. All those things combined to a really challenging moment for CTC as an agency where we had well, and technically I wasn't an employee then. I was a, I I I was relating with the, with the joint for a long time in various capacities, coach, consultant, various things. But, I was watching this kind of freight train of, of growth in terms of just headcount and payroll costs

and serious commitments on the part of the organization.

I think we were almost at 180 employees back then, and I definitely felt like I was part of the team whether I was a full-time employee or not. And watching that growth was thrilling. But when things. Shifted so dramatically for everybody in the entire industry. CT C was in a tough spot and they went through a series of employee layoffs and it was around this time fall of 22 where Taylor basically was getting very clear about. Who were the people in the organization that we needed to draw a circle around and make sure that we were locked in with who are our key employees? And we actually did a series of retreats where we he asked me to lead these retreats around, how you show up as a, a standard setter. How do you, we called it thermostat commission,

where you go into a room and you actually be, become the kind of leader that changes the temperature, doesn't adapt to the temperature.

'cause that's what was needed in that moment. And we waited ourselves into that conversation in a way that the result of that was we asked. Not less of our employees to keep them happy, so they would stick around. But we asked more of our key employees, and what we discovered was when we asked more of them, they wanted to participate more.

In fact, we discovered later some were actually considering leaving because they didn't feel like the level of standards were high enough.

For what the kind of people they wanted to be around. You know, you hear this all the time in public lore around, you know, who are your five closest friends? And if you're the smartest of those five, you might not be in a good friend group. You might want to think about a different crew. And, and it's not just intellect, it's, it's, you know, habits and I you show up in life and what you're about. So anyways, we do these experiments and at the end of these retreats, they went really well. These folks really, they bought in. And Taylor pulled me aside and says, I have good news and bad news.

Bad news is you're fired as a consultant and coach. Good news is if you want it, you can come on the team and serve on the executive crew with group of amazing individuals. But he said it's a tall order. We actually want to fundamentally shift our culture. We wanna do what you did this weekend with our whole team over the course in a very quick. Moment where we could actually enroll a group of people in the idea of, of choosing to do the hard thing at work, choosing to be the kinds of people that would I. Invest disproportionately, not because of somebody cracking a whip, but because they volunteered for it.

'cause they want to do that kind of work. And could I design a system that, that could, that we could do that in? And I, and candidly, in a, in a workplace context, I'd never done that. I, I had done it outside of the workplace context in a community that I, I lead. But I had never done it in the context of, of the workplace where you're paying someone a paycheck and asking them to do more

than that if they wanna participate. But we applied the same principles that I used out there in here, and holy smokes have, did our people respond in a way that. It's humbling to watch, amazing to experience, as, you know, to be shoulder to shoulder with these colleagues, these really smart individuals at CTC and to really see even a reputation in the industry. We, we, we positioned ourselves as a, as a company that o only wanted a certain kind of employee, even though there were really good people who who we love, who don't work at CTC anymore because they weren't really up for the culture that we were designing and, and implementing. 

[00:06:50] Richard Gaffin: Let's, let's quickly go back to you're talking about the, the fundamental shift being around the demanding excellence from our people.

But I mean, so part, part of me is, is like, surely it's not as simple as that. I mean, is there any other, what were maybe what other elements had to shift in order to make that possible?

[00:07:10] Dane Sanders: Yeah, it's the right question. And, and the truth is, we actually, it's, it's less that we demanded that people needed to behave differently and 'cause we weren't actually trying to create a high performance team, we didn't go to the individual and say, will you change, please?

What we did was we changed the environment.

1. That was again, a nod to Taylor here and his courage. He was like, we, we have to fundamentally shift from an an employee centricity kind of mindset. And this is an important point, like. For years some of my role even at CTC was to really talk to employees and say, what do you want? What are you dreaming about?

You know, on, we wanna help entrepreneurs achieve their dreams. We wanna help our employees achieve their dreams. Let's get after that conversation. And for all of the good intentions and maybe even seasonal value that we created we had kind of created an entitled culture where there's a portion of, not all, but a portion of our employee group that. Kind of, they were, they were thrilled to work at CTC and they were excited to see what, what CTC would do next to make their life better and easier and more comfortable. And when we decided we were gonna fundamentally be a different place, we actually had to go through a, a process where we said out loud, Hey, we're, we're becoming someone new.

And let's be crystal clear about who that place is. Let's reestablish our vision, our values, articulate these as way more than just like. Something you put in a frame on in some corporate office, but it's like a lived out set of values that actually inform how we do what we do every single day. And and we can talk about those if we want, but

the point is, we, we declared who we are now and we basically said to the entire group of employees, this place might not be for you anymore. You came in under one kind of agreement of a kind of a cultural contract. We're shifting cultures. And two things. Number one, if you decide to leave, you're not a bad person. It's, it, you're, it's totally reasonable because we were one and now we're something else. But number two, we are gonna be this thing.

It, it was an existential crisis if we didn't actually become that thing. We were clear we were not going to survive.

And what, what we really discovered was we put ourselves in a path to re ridiculous thriving,

like at a level that was entirely unprecedented in 12 years of our existence as

a organization. 

[00:09:24] Richard Gaffin: No, I, I, it's, it's fascinating 'cause I found my, my personal experience of it was that kind of previous to the shift that we're talking about part of the identity of being a CTC employee or rather the identity of a CTC employee didn't really include. Excellence in the work itself.

There was sort of a sense that what the work was could be kind of, could be anything.

The, the focus was more on your own sort of personal development and what you wanted to do. 

But I think what you're pointing out is that when we were able to create a collective. Sense of purpose and the sense of really ironically, belonging, which is kind of maybe some of the language we'd have used previous.

We were actually able to better achieve the goals of, of giving folks a sense of purpose and, and a,

[00:10:09] Dane Sanders: that's

exactly 

[00:10:10] Richard Gaffin: to belong. Right?

[00:10:11] Dane Sanders: Yeah. And, and to your point, Richard, like, it, it, it wasn't that we weren't, weren't committed to that, these, these kinds of ideals before it was more the

target, like,

Optimizing for what. So I think what we were optimizing before for was sense of pleasure for the employee.

If I can be crass and, and like where it's just like I love Go Work is awesome. The perks and the swag and the stuff, it's great. And, and, there is a degree to which that is motivating and it is just very short term. It's very,

it's very kind of, it's insatiable. It's like, okay, so that's what happened last quarter.

What are you gonna do this quarter? And then we just kind of relocated the target away from, Hey, let's just pause on making sure that you're just super happy and let's actually consider another stakeholder in the equation, which is our customers.

Like, what if our customers were ridiculously happy?

What if we actually woke up every day as a group of employees and said, how can we actually make sure their. The ones who are benefiting and

what, to your point, Richard, what happened was we still had that same collective experience of belonging. We were just doing it in service to customers as opposed to a service to ourselves.

And, and, and that's, that's too simplistic to to, for the actual play. Like we, we served customers back in the day too.

No question. We couldn't have been, we wouldn't have been viable as an agency, but we shifted our focus so distinctly, everyone began to kind of, at least the folks that stuck around and the folks that we brought on after.

They actually wanted to be a part of an environment where that was the case. Of course, there's kind of acknowledged self-interest. We wanna make sure that people are paid well. We wanna make sure that people have titles that are exciting. We do want to have perks in the workplace. All those things are great, but we, that was entirely secondary to a collective commitment to the customer.

And we needed to design, not just declare this,

but we needed to design a whole set of tools, a whole set of operating procedures, a whole set of. Interventions in the workplace to back this claim up that we were becoming someone new. And I think that's where it actually got really material and exciting.

[00:12:12] Richard Gaffin: Yeah. Yeah. So, so let's, let's get into that then. So you had mentioned previously that this, this was essentially your first time building this type of thing for a business 

or as in the role that you're in right now. But talk about the times that you built it before

[00:12:25] Dane Sanders: Mm-hmm.

[00:12:25] Richard Gaffin: and what you kind of learned from those contexts that you were able to bring into CT.

C.

[00:12:33] Dane Sanders: Yeah. So, I won't be long-winded here, but I will, I will point out some, some key discoveries. So basically like a lot of folks, I'm, I'm not in my thirties now, but when I was in my thirties a while ago, I and I'm really glad that at least some people are receiving this podcast

audio only. So they can just guess at what that means. But the, the point is simply I. That middle season of a lot of people's lives, like if they happen to maybe they have a partner and they, maybe they have kids and they, they maybe used to have been really good at sports or, or business or athletics or something in their life, but they had that kind of malaise in the middle and they were giving kind of pieces of their life up.

Maybe they're getting a little overweight or they're getting a little bit, halfhearted in sections of their lives neglecting their marriage maybe or something, you know, whatever the category is, it matters a little. But in my own life, I had my own version of that and I realized the, the design of my own life was such that it was not yielding the fruit that I wanted. I had a, a buddy and a third friend, a guy named Shockingly Taylor Holiday, who joined in on this project. But we created a little, a small little community people who did the opposite of that. It was like, how can we actually build our life to raise our hand around doing the uncomfortable thing? And and then we systematized that.

We built out whole. Kind of, a, a prescribed practice that individuals could take on to build their life around doing hard things. And when they did hard things, there's this great line, this guy named J Gregorick is famous for hard choices, easy life, easy choices, hard life. And we built a whole community around that sense of ideal. And, whether it was, you know, when you eat, what you eat, when you drink, what you drink, what you don't eat or drink when you work out, when you get in cold water, when you do an anonymous good deed for somebody, whatever it was that we resisted that we could dream up, that we knew that if we did the thing, it would make us a better person. We committed to those things and built my, I built my life around that. Then our community slowly built around that, and now we have this group all over the place that a bunch of people are participating in it. But that was the thing that Taylor first experienced with me. I. And then in me being involved in the, in the organization, he had this idea of like, could you do kind of that stuff with our small group of employees?

And then it was, let's apply it to, in, in, in a, in a properly designed function where we had the tools and we could actually engage in a, in a predictable. Strategic way to get to execute on this these methods. So those were the kind of the ideas. But it was very different in the workplace. 'cause it was one thing to have a community of people who said, Hey, let's volunteer to do hard things together and I could prescribe what to eat and drink and so on. You don't really prescribe what to eat and drink at work. It's a little it feels like it's a little beyond scope. So what we had to do was actually think through the lens of what it's like to be an employee at work. And what are we calling people to and how do we design things to both incentivize, motivate people in the direction of doing the hard thing but do it in a way where they have agency where they're raising their hand and they say they want to go do that thing. We leaned into a ton of really good research. If anyone wants to do some homework on a self-determination theory it's worth a little little perplexity search. You'll be glad you searched it. But this is an, we built a whole culture around this modality and,

and kind of proven validated psychological system of

motivation and it 

[00:15:57] Richard Gaffin: I, I think we should get into it a little bit 

[00:15:59] Dane Sanders: okay.

Let's, that's 

[00:16:00] Richard Gaffin: maybe too curious, we don't, we don't need to go deep, but talk to me about that, that sort of ba philosophical basis, let's say, and then 

we'll get into some of the specifics. 

[00:16:08] Dane Sanders: Okay. And, and I, I'm very sensitive that I can be philosophical

in nature and I know when you wanna

get to the tools,

so if, if you're 

[00:16:14] Richard Gaffin: So we're gonna have to, you know,

[00:16:16] Dane Sanders: Yeah, we'll

fight 

[00:16:17] Richard Gaffin: blind leading the blind. We'll 

[00:16:18] Dane Sanders: Yeah. Yes, yes, yes, yes. So, so, and I'll make it simple. It's a question of motivation. So asking the question, why do people go to work? What is motivating them to go to work? The simple kind of surface answer is to get paid money, you know, or maybe get paid status with your title or to feel like you have standing in your community or whatever. But it's, it's, it's just easy to say, well, people go to work so they can get paid money and then provide for whatever they need to provide for. And it's, that's not untrue. That is true, but it turns out that people, that isn't why people do their best work at work. That's why people maybe go to work and will log time and do tasks that they're told. But it's not why they they do elite level performance and it turns out that elite level performance more long, it takes a longer time.

It's a, it's a longer time horizon, and that means you have to pay attention, not just a short-term motivation, but also it's a long-term motivation. And this is where self-determination comes in. And really, we just identified three very simple things that we decided up front we were gonna build our entire culture around. And those three things were, were first of all agency that I could lift my hand and say, I want to go do something that's difficult, because if I create the compression by doing that hard thing, I'm actually gonna grow. I'm gonna become better at something. So that's the first thing was like you are choosing to do the hard thing, not just forced to do the hard thing, but choosing it.

That's agency in our world. Second. It was excellence or, or, or mastery or competence, whatever you wanna call it. It's basically, you get better at your job every day. And it turns out, if you look at all employees everywhere it, it kind of breaks into two groups. One is they, they just want short-term motivation things, and the other is actually they actually want to get better at their job every day. But it turns out to point number one, you don't get to get better at anything. Unless you create compression, unless it's hard at some point. And that for you to choose the hard thing, agency gets you to mastery. But then there's this third thing that you, we've already pointed to a little bit, which is belonging.

When you are a part of something that transcends you, that isn't just about you. When we shifted from employee centricity to. To customer centricity or even standard centricity. What we ended up doing was we, we created the proper incentive for people to go. I actually, I'm happier when I'm not hyper concerned about me all the time. I need enough kind of. Of a foundation to know that I'm taking care of. But I actually, where I'm most satisfied and gratified at work is when I'm doing things in service that we collectively are doing together. Common thread that when people do that together, it's, it's disproportionately motivating for the long haul. So, agency mastery belonging or agency competency belonging, we think of a, B, C, so agency. C is competency and b is belonging. Is has been our, our, our first step of saying how could we build a culture around that? So one of the tools that we have in our, in our system is this thing called the collective index, where we actually measure every quarter how people are experiencing, do they see the everyday life?

Does, do they feel like they have agency? Do they feel like they are getting better at their job? Are they working with other people that promote them wanting. To get better every day, and do they really feel like they're part of something special? And as what we've seen kind of quarter in, quarter out is we're making really good progress as a culture, but then that's at the table for the more individualistic tools that we, we've also created.

[00:19:45] Richard Gaffin: All right, so let's get into those then. Let's quickly bring it down to 

[00:19:48] Dane Sanders: Does, does that make sense

though, what I'm saying about, I wanna make sure.

[00:19:51] Richard Gaffin: right? So, so the idea there, just being that like there's, it seems like there's an interesting combination of you're providing people agency

in order for them to then go out and serve something. Greater than themselves.

So there's a sort of a self-determination 

that has a collective outcome, I 

[00:20:08] Dane Sanders: That's right.

[00:20:09] Richard Gaffin: and, and it sort of struck, strikes me anyway, that like the experience of being asked when, when you talk about shifting towards the more customer-centric mindset, the, the experience of being asked to advocate for somebody else.

It tends to be easier than to be asked to advocate for oneself. 

And there's situations in which that can be good and bad or whatever, but I think generally speaking, it makes sense to me why people would have an easier time understanding that like, oh, I'm taking care of now I can push towards something bigger and outside of myself, I 

[00:20:36] Dane Sanders: Right. And we see this in like Maslow's hierarchy

needs, and like there's, there's, there are things that validate this, this idea, but actually how do you get to those higher level kind of contributions where you

feel like your life's a little bit more meaningful? Well, this is a, a very effective path to do that.

[00:20:51] Richard Gaffin: Yeah. Okay. So let's talk about then so you've already alluded to the collective index, which is kind of how we take the pulse of the entire company. But let's talk about some of the specific ways that you move this from, or I guess where you quantify the qualitative, which again, 

to my English major mind sounds like a very, very difficult thing to do effectively.

But talk about the ways that Yeah. Talk about the specific tools and, and how we kind of bring that to life.

[00:21:16] Dane Sanders: Yeah, so the, the first tool that we thought a lot about was a tool we called the death chart. And for those sports enthusiasts out there, maybe played football in high school or something, or whatever. Whenever you have a, an organization where you have roles with multiple players who are playing that same role, if you want, you can create. A depth chart, which is basically how do you, who ranks where on the list. So if you had a, you know, in football you have quarterback, QB one, QB two, QB three on a team. And what that means, QB one is a starting quarterback. QB two is a backup quarterback. QB three is a backup to the backup and in football.

That makes sense. And it turns out an agency life that can make sense too. You have. You have media buyers, you have growth strategists, you have creative strategists, you have a lot of different roles where you have multiple people playing those roles. And the truth is, there's a subjective take already in a department as to who the best growth strategist is.

Right? But beyond that subjective take, we started asking the question, could we actually have any kind of objective metrics that would tell us or predict who is going to be the best in a given set of rules? So we went through a long set of exercises of, I'm identifying like. What are the key behaviors of our top performers?

Top performers, just if you just look at revenue production. And based off of that, we started identifying, we tried to narrow to the, like the top three to five at most. And then we started working with managers to try to create a, a, a nimble tool that wasn't too much of a heavy lift that managers could touch every single week. Track who this week is winning in the depth chart in a particular role across the organization. And we primarily focused on ics, individual contributors, not so much managers as a different, that we view management as a different skill set than the IC work. But the ic IC work was so mission critical.

They're the closest to the client. So we wanted to get that right first. And we came up with an imperfect system that wasn't complete, but was getting us much closer. And we started. Putting up our rosters by department and week by week ranking where everyone landed. And we realized week by week was a little bit much, and we switched it to more quarterly.

'cause week by week on a depth chart was kind of tough. And on a quarter we had a, a bigger data set, so we eventually shifted quarterly. But what we have now is role specific behaviors. As well as every quarter we do what's called a forward progress. So we're assessing how well they're doing moving forward, and they get a score for that. And then they, we, we do some clever math and it all rolls up into a single score out of a hundred that tells you your rank. You know, let's say it's one through 10, if there's 10 employees in that one kind of job title. And based off of that, we can, we thought that would be it. Like that would be so great.

But then we realized, well, what if that was act, that single number out of a a hundred was actually just one data point? Could there be other data points that we could add beyond just the behavioral skills that they employ in their job? Like, for example, how do they show up in a client meeting? What's their energy like?

What kind of drama do they bring to the team dynamic? Do people like working with them? What's their likability factor? And we started getting creative with that and, and we realized the depth chart could actually be a component piece to something that we could assess every single week. And we actually invented a new, a second product or a second tool called the key employee Index, and we just started asking the question. What is it that contributes to someone being a key employee, somebody that you couldn't live without in Seth Godin language, the linchpin that you just makes the biggest difference. And we started coming up with some very customized ideas on how we view individuals subjectively, objectively and also how they view us. Are they flight risks? Do they have the right energy? Are they on any kind of intervention? Which we'll get to in a minute, what an intervention is. If they were, if they seemed like a flight risk, do we have a backup plan for them? Do we have any agreements that we could make with them around how they might wanna reinvent the relationship with an individual or with the organization?

If there's any kinda upsets, do we have any clue of their personality types? Could we integrate that into the assessment? And could we ask managers to actually take notes on a week by week basis? Ultimately on, if they're wholeheartedly committed to the mission that we're up to. And then also incorporate the depth chart. So these are some of the tools that we started creating. And and it felt scary. I'll just say this upfront, it felt scary, like how much of this do you share with employees

and whatever. But what was most important is that we were finally being real. But we did have an opinion about our employees,

and we did need some means to measure whether or not we were being effective in, in calling up our, our employees to become key.

[00:25:49] Richard Gaffin: So let, let's, let's talk about before we move on to something else, I do wanna dig into the specifics 

of both of those things, the death chart and the key employee index. So let's take as a, for example our growth strategist, that's probably the, the key employee at CTC, 

They're client facing. They're also the one that manage, or that drives the 

whole team, that manages the forecast, all that type of thing.

So for a growth strategist. What are the elements that make up that depth chart score?

[00:26:17] Dane Sanders: Yeah. Yeah. So, we wanna make sure that

they are contributing to margin in that book of business. So it's really critical that we we're, we're, we're measuring all the time, like, how much are we paying them and how much revenue are they responsible for? Relative to our top line and bottom line, how much profit are they creating for us?

And also in top line, how much revenue are they producing for us? So that's kind of one area, and we give them a score out of 10 relative to that. And it's, it's not complicated math, but it's, there's, it is just math. Like

that part's objective. We've, we have, they have a book of business, certain clients that client is paying X amount of money.

And we attribute a certain amount their, as a growth strategist, their contribution to us retaining that client and booking that book, that business month in and month out. We give them credit for that. So that's one area they, they're this valuable to us on a dollar for dollar amount. A second thing might be retention, key client retention.

Are, are people sticking around? Are there, do people like working with them over time? A third might be. A standard of achievement internally. Are we measuring like that they're doing the blocking and tackling of what we say that role requires in order to be successful? So those would be again, a little bit more on the objective side, but we also wanted to look at things like, let's say we did have a budget cut and we had 10 growth strategists and we had to get rid of five outta the blue. Where would we draw the line in a, in a. Purely subjective from the manager's perspective, head to head. And we actually, we actually do the math on that too. Kind of like, if anyone's fans of English, premier League Soccer or any kind of soccer leagues out there, if he had a head-to-head Jane versus Fred and Jane won, Jane would get three points.

And if Fred won, Fred would get three points. And the opposite would get zero if they tied, if they were really seen as equal, they'd both get one point. And and that's how we kind of scored the head to head. And we integrated that subjective score into the objective metrics score. And we wanted to make sure that this was both to test the employee but also test the validation of the tool. 'cause sometimes in the early days when we first created the key employee index, what we found out was. Sorry, the death chart, what we found out was there was objective metrics where it seemed like employees were contributing a lot of great revenue and doing really well with best practices, but there was a bias on the part of the managers.

They just liked an employee more than another one, and there was a disparity of like where people ranked them on the head to head versus. The more objective metrics. And that was super helpful for us. 'cause we could have direct conversations with managers like, do we have biases here that were, that are unfair for the employee? Or we could look at the tool itself and say, are we actually measuring for the right behaviors? 'cause if we really perceive this employee to be this great, why? Why are they not showing up? Kind of validated on both sides of the equation, subjective and objective. And as we iterated on the tool over time, we were able to create a pretty val, it worked on both sides of the equation and, and managers had increasing confidence that this is the actual right list of what's going on. And this is very helpful when you come up to like performance reviews and whether or not you're gonna give somebody a raise or not. Or now you have all the data baked in and no one's surprised going into those kinds of meetings. And people know what it means to be successful in their role.

[00:29:27] Richard Gaffin: Yeah. Okay. So let's then let talk, talk about the, the more, more qualitative side, although I guess the death chart does include that, which would then be the key employee index. 

[00:29:37] Dane Sanders: Yeah, yeah, yeah, 

[00:29:38] Richard Gaffin: there's a few, few elements there. The, the most intriguing one is the rule of 10. So let's start off with that and how that kind of plays into

[00:29:46] Dane Sanders: yeah.

So, credit where credit is due. Rule 10 I, I, I stole from a dear friend and colleague of mine, a guy named, and, to my knowledge, he actually invented the rule of 10, although he's clever enough where he might've stolen it from somebody else before him. But the idea is simply this, that if you look at a group of any group of 10 employees in, in the workplace as a starting point, you're probably gonna have in rough statistical categories, three categories of people. We call them the threes, the fives, and the twos. So out of every 10 people, three of them or sorry, two of them. Our standups, they're linchpins, they're, you don't have to do any interventions, any contribution. They just show up at work early. They stay late. They do their best work. They always wanna improve.

They raise their hand by default to do the hard thing. They're amazing. And if all you had were twos in your organization, you don't need me or what we're doing at CTC you're, you're already, you found the promised land. But the truth is it's usually only about 20% of the population. And that, that's one group.

The second group, very predictably, are the threes. And the threes are the exact opposite. These are the status quo seekers, feet in the mud. They, they don't want change they don't wanna work beyond, you know, their contracted amount. And it's not because they're, they're just not motivated beyond just, we're doing a transaction and I do labor and you give me money, and we call it a day. And not that it's, that's inherently bad. It's just a different category than the twos. The twos are different. Then the threes, and then of course that begs the question, well, what are the fives? Well, the fives are on the fence. They don't know if they wanna be a two or they want to be a three. And they're kind of looking at the environment and the culture and saying, who, who gets rewarded in this culture?

Do the threes get rewarded? Can I work to rule? Can I quiet quit here, or do the twos get rewarded? Is this a standard setting culture where. If I step up, it's gonna be seen and it's gonna be rewarded. And we declared upfront, we're a two culture. So every single week, every manager looks at all of our employees and gives them a rating.

Are they this week? Are they a two, are they a three or are they a five? It's entirely a subjective metric, but it, it is a feel. You, you, you can kind of tell whether someone is wholehearted. And what we do is we hold this data point kind of lightly. It could be that someone's just having a bad week, maybe something's going on at home we don't know about. Maybe

they're they're ill, they have a, they're a flu. There could be a lot of reasons. It's, it could be not so much a trait of theirs. But it's more of a state of theirs. Like in this moment they might be a three or a five, but if you track it over the course of several weeks, enough long enough time horizon, you can see the fluctuations.

And if they're more often twos and once in a while, a five, it's very different than people who are mostly threes who are sometimes a five. And the truth is, we, we realized early we were in a race, we were in a race to figure out who are the twos so that we could edify those folks and hopefully enroll the fives. But we made a commitment early on to ignore the threes. That the threes, we are not trying to convince people to do something they don't wanna do. We might have a conversation with them, but we're gonna be very direct to say we are a two culture. And if you want to thrive in this environment it's, I either you wanna decide to, to get to become a two, get on that road, or this place is probably not for you. And, this is where the transition, it was stark at the beginning 'cause some people ended up leaving early 2023. But very quickly we calibrated to kind of a two culture and we have been a rocket ship ever since. So that's just one of the things that we measure in the key employee

[00:33:13] Richard Gaffin: I was gonna, was gonna say that, that's, that's fascinating. One thing I really like about it is. That it's that the 2, 3, 5, or the rule of 10 system rather, is realistic about the fact that the fives and threes will exist in any given set of people.

And, and then gives you, because you sort of understand where you, or you know where you stand, you're able to actually action against it in a way that you can't.

When you sort of talk about the culture, everybody talks about their culture as being, oh, we're about all about performance and excellence and whatever, but there's no sense of actually. Figuring out whether that's true or not. 

Or, yeah, or any sort of follow up, I guess.

[00:33:50] Dane Sanders: Well, and and really the rule of 10 was just the beginning. 'cause then we started

thinking, well, well what else? Like we had one employee at the time, ho go nameless. Who's no longer with us. Who, um, was he, he brought a lot of drama to the equation.

And it was may have had some skillset, but there was such a cost to interact with him.

Everything was really high or really low and all these things, and that we realized that that was coming at a cost to our customers.

We're spending disproportionate time internally processing things that everyone else seems to, seemed to get really quickly, but it was always a, a challenge or a problem, or a hiccup or a hitch.

And we started to realize like, that's not necessarily a reason to let someone go instantly, but could we track that over time and see what kind of energy does someone bring to the interactions internally between teams even? And certainly with our customers and 'cause the customers don't mind telling us that we don't like that guy's energy or person's energy. So why wouldn't we start getting more brave and saying the same thing to ourselves? And as we did, people could now have a chance to correct course, they could actually realize their impact and potentially shift. Whereas before, they may not have even known that they were having a negative impact because people wanted to be polite and not talk out loud about how they were experiencing the energy.

[00:35:01] Richard Gaffin: Right. 

[00:35:02] Dane Sanders: We actually called it, we actually called that one the drama attacks. We've since changed the name. But it's, it's a real thing.

[00:35:07] Richard Gaffin: yeah, no, of course. All right, so let, then let's talk about like in those situations where, let's say the, the drama tax is being levied, what 

action is taken? So you had mentioned before the idea of interventions, I think to most people's 

mind, that that means, I don't know, you have a conversation and then you lay them off or whatever.

But what does it look like to. Yeah. What does it look like to intervene within the system, I guess?

[00:35:29] Dane Sanders: That's a great question and let, and let's talk about the drama attacks, because

initially we thought it was just one direction. It was just you had, you brought a lot of drama and that was expensive. Then we realized there was actually a, a, a. An employee type or a set of behaviors from some employees that was low energy, not enough

energy, not enough drama, and they, there was, they weren't animated, they weren't excited when they were talking to a customer.

And we realized, well, what if we could measure for that too? So instead of just saying it's a drama tax, we actually changed it to an energy quotient. And we said, and it was kind of the Goldilocks method where we said, we, if you're too low, that's not gonna be very good. If you're too high, that's not helpful. We want just right like that, that kind of more mature, measured, thoughtful way of relating where you bring the energy when you need it and when you don't, you don't make it about you. And so that's what we call it was the energy quotient. Well, inevitably, if someone has too little energy or too much energy, we had to, or just right energy and they wanted to progress in the organization, we had to have a series of ways to support and challenge. Our employees to develop and perform. That's

my job, VP of development and performance. And that meant that we needed to have, first of all, a base level sense of where people stood and then get into real conversations about what they wanted in the workplace. So the, some of the interventions that we have, when I say them out loud, it's funny.

It can sound so fundamentally basic, like, well, of course we do those. But not in my experience, not many organizations build whole. Cultural norms around these basic things. So for example, one intervention might be a request, like the idea that I would say to another colleague of mine, Hey, I experienced you as really low energy.

I have a request when we're on a call with a client, could you bring more energy? Maybe have a latte before you start the call. Like, do, like, maybe make sure that you had a good night's sleep and drank enough water. Like whatever you need to do to put yourself in a position. Where you have the right energy.

'cause that energy, it turns out the likability factor with the client makes a big difference. So we, something as simple as a request or hey you're an external verbal processor and the client we're working with just wants to get to the point. You might be perceived as bringing too much drama to a conversation unnecessarily. My request is could we pre-process in advance so that when you get on the call, we're just. To the point and on, on task that those kinds of things. We view a request in this intervention,

but another intervention up upgraded from that might be an agreement. An agreement is basically a decision where two individuals come together and co-create a new relationship.

They reinvent the relationship. So let's say you have two employees within a department that just. They have a personality conflict. They butt heads all the time, and maybe they've known each other for a long time, so they have a bunch of old experiences and stories. They've, they can tell each about each other, and we need them to work better together as an organization to be effective. Well, we'll have a facilitated conversation where I will sit down with two individuals and we will talk about what would. If you could wave a magic wand and, and create a new reality from what you have right now, what might that be? And can we actually articulate that on paper and, and like actually document it, sign it, decide I'm choosing to be, to show up differently for the sake of reinventing this relationship. And we've seen great effectiveness with people just having a chance to. Be honest about how things are currently, how they're dissatisfied and have a chance to contribute to what the new relationship is gonna be, as opposed to just being told you gotta change and be different. So that would be another kind of intervention and

they keep ratcheting up from there.

So we have requests, we have agreements. We also have you mentioned earlier, kind of if things are going in the negative direction performance improvement plans are not uncommon in organizations. Maybe before that they might get a verbal warning. We do those things right? If someone's. Out of alignment with what we've declared is appropriate for a given role. We have those things in place, but we're also a high performance culture. So we realized we, we needed to design some other interventions that were actually for the, for the twos and the fives, the people that actually wanted to get better at their job every day. So we invented a thing called the VIP or, or voluntary improvement. Process. And we've had people at the highest level, VP level, people raise their hand and say, there's a skill set that I'm not fantastic at, but we have a subject matter expert in the organization. Could we create a facilitated mentorship where that person helps me get better at that thing? And we've seen tremendous success.

We've seen people go from directors to VPs from managers to directors just because they raise their hand to do extra work above their job. In order to get better at a skill, in a more expedited way through this facilitated apprenticeship. And and we're thrilled by it. We're upgrading our own people without having to go outside the organization to, you know, hire for, you know, higher level skill set roles

[00:40:24] Richard Gaffin: you know, I was gonna say, say, like, one, one thing that I like about this set of interventions that seems like it distinguishes it from a lot of the way interventions are treated in organizations is it gives it, it gives employees. A framework for airing grievances diplomatically. That might be a way to put it, 

which is that it's, it's okay to speak up about something and here's a very specific language in which that you, you need to speak up about it so that it doesn't just become, I dunno, passive aggression 

[00:40:52] Dane Sanders: Yeah. or,

a com

You're, you're a complainer

or you're a Yeah, a hundred percent.

Yeah. It's, it's funny you say that. One of the things that we're very fortunate to have is an executive team that wanted, and I keep pointing to Taylor. 'cause again, I, I'm, so, he's, he's been a friend of mine for a long, long time.

But I'm so grateful and impressed with his willingness to create space for these kinds of things. But we have a thing called like level up coaching

where any individual in the organization can jump into a coaching call. It's, it's, it's semi, it's not like. A therapy environment. It's, it's very much a performance oriented conversation, but it's really around, Hey, this is where I'm at and I need to process in an environment that doesn't isn't going to distract from our work on behalf of the client, I really wanna just have input on how I'm relating with my colleagues, my work, my clients. Maybe there's things beyond the workplace that they wanna figure out how to integrate and navigate in, or they have aspiration or they wanna process, where is their career going and how could, how could they get there? And we have people on regular rotations. Some go every other week for months and months and months.

Some come in for like quick hits, but even to have space for that to be in play has been remarkably helpful. Even just from a client or from an employee retention. Perspective.

You know, a lot of, a lot of employees are quietly harboring a lot of ideas and thoughts and feelings, and this gives a place to, to get that out that's appropriate, that doesn't distract from the work, but also really helps them get clear about why they're here and why they wanna keep doing their best.

[00:42:24] Richard Gaffin: Yeah. So I think it would be interesting to talk about as we're kind of, kind of wrapping up here about, you know, so this has been going, or this system has been under construction, and then in operation, let's say for about two-ish years, maybe 

[00:42:37] Dane Sanders: Yep, that's right. 

[00:42:39] Richard Gaffin: And in that, in that time, what.

What feels like the current, not drawbacks, but like where do you find, feel like there's still opportunity and where do you still feel like there's, there's some struggle in, in bringing this to life?

[00:42:53] Dane Sanders: Yeah, so, well, first of all, we had to make sure that it was effective, right? So we, again, going back to the very beginning, we made a bet on short-term and long-term motivation, and if we invite, created an environment and designed tools and systems for measurement to see if that environment was effective.

1. We, we thought this would create high performance and it was really a high performance environment. And, and we would draw people in and keep the right people and so on. And that was great. What's interesting about humans in my experience is I. At all times. There's two, there's three things coming at each person, and this is why I don't think I'll ever be out of work because this is a, a phenomenon that's human in the, in the human condition.

The first of all is a thing that we call the drift. And the drift is basically like if I have a hot cup of coffee, here's what I know. In 10 minutes it's gonna be cold. Same thing is true about an employee at the end of the day or at the end of the month or at the end of a quarter. There's a degree to which energy is dissipating from entropy is real. We're up against it there. You know, at the end of a long life, you get tired and you die. Like there's a sense in which we're all in, in 24 hour windows and seven day windows, and 30 day windows, and six month windows, and three month windows and 12 month windows. There's energy that we need to recapture because we know it's gonna dissipate in time. And because of that we are never off the clock when it comes to this work. There's no set it and forget it. We are constantly aware that if we don't keep reminding people who we are, what we're about, reinforcing it with our behavior at the highest level of leadership and keep looking for ways to refine these tools and measurement we're not gonna be effective. The second thing that's always true for humans all the time are what we call whirlwinds. Like we have a, an employee on bereavement right now. We have people who are, who they go through splits with, you know, partners and they, they just go through hard things. They have, they have babies and that's, that's, you know, that's kind of complicated and life changes pretty quickly. And we wanna account for those whirlwinds and make sure that we have enough. Slack in the system where we can account for that. So this informs how we do things like if, if we know that an employee's job, we should expect this much of an output from this much time we build a little slack into that so that we can account for the whirlwinds that show up in life. But the thing that's the, the most thing that the, the biggest challenge that we always are aware of and that we're always course correcting for, is that the easy way is always the attractive way that when

people are unconscious at work. It's just so tempting to go, I want the path of least resistance.

'cause that's how humans are kind of wired and humans aren't bad for that. We get that. I'm wired by the way, you're wired that way. So what we need to do is index against that and say, how do we constantly invite people to this notion? I. When you choose the hard thing, you actually are gonna get a better sense of satisfaction.

This is, it's delayed gratification 1 0 1. When you delay the gratification, you're gonna get a better return on your efforts. So do the hard thing early so you can get the better thing later. And we just are perpetually reminding people of that. And I think probably some of our, our biggest opportunities in the days to come, especially as people get scared around. Innovations with AI and all the different technological advancements that are coming. Do people, are their jobs gonna shift radically? They are. And how do they keep waking up every day and saying, I wanna keep doing the hard thing without being too fatigued or too beat down and so on.

So, I believe we have found some pretty special sauce where I get to work every single day with a group of people who are. This is not like company marketing baloney. Like people really wanna work here and they, they wanna make a difference and they might have had bad, bad days or bad moments, but when they see it, more often than not, they course correct voluntarily and index towards the hard thing. And as a result, they're happier at work.

And, and we won't have 'em forever, but we are confident they will look back with great, a great sense of gratitude that for the season we had them and they were here. And part of this that, that it was a pretty special thing.

So lots of headroom, lots of room to grow all the time we're, we're never done. But I feel like we've set a really good foundation.

[00:47:08] Richard Gaffin: Yeah. So let's, let's talk then about the, the, I mean, there's the one question I like to ask everybody and I usually ask Taylor, which is that if you could, you know, for many of our listeners, they're not even at a point where they've started thinking about putting this type of structure into 

[00:47:23] Dane Sanders: Yeah, that's

[00:47:24] Richard Gaffin: But what is, what is the one thing that you would do. To begin to shift, let's say your company culture towards something like this.

[00:47:31] Dane Sanders: Yeah, I would, I would absolutely look at an atomic level perspective. So whether if someone's listening to this and they're just an individual operator, they're doing their own thing, or they're part of a, a, a scaled enterprise level business, and they're, you know, wherever they fit in between those two realities it still comes down to the individual deciding that every day when they wake up. They see that the best thing they could do for themselves is to choose to do the hard thing.

Choose to, to acknowledge what you're resistant to and move toward the hard thing. And we see this, this is not uncommon. We see this in high performance sport. We see this in high performance academics. We see this in like the people who win the Nobel Prize of anything, didn't drift their way to winning that Nobel Prize.

They did something really, really, really difficult. And they're more satisfied more often than the people who decided to let the drift take them wherever the drift was gonna take them. And when you can get clear that you, you want, that, you want to live in a, in a kind of an excellent environment, here's what's gonna happen. And I want to warn people up front that even though I'm recommending this, there are consequences. You might become dissatisfied in the environment you're in. You might realize that your colleagues. Aren't up for those same things. And my encouragement if that's true and you want that, it's worth a conversation with the leaders around what it, what could it look like to start making incremental steps towards building a culture of excellence.

'cause what we have found is people are more satisfied at work, not less when more is asked of them, but when they have agency in the

process. And so I would, I mean, it's, I'd go back to Jersey Gregor and I'd say choose the hard thing, have the better life. And do it at an individual level, at work, at home, in your personal life, wherever you can find it, find the grit to do that work and you're gonna be uncomfortable in the front end, but satisfied in the back end.

And if you can make that a habit and a practice in your life you will live a fantastic existence.

[00:49:34] Richard Gaffin: Love it. All right, well wise words from you, Dane, as always. Appreciate you being on. For those of you again, I say it every time. If you wanna work with us, common thread code.com, hit that hire us button. We would love to talk more. But. We will talk to you next time folks. See ya. Thanks again for joining us today.

[00:49:50] Dane Sanders: Thanks, Richard.

[00:49:51] Richard Gaffin: Alright.