Neville Joffe | Profit Sharing, Financial Literacy for Everyone, and Why Every Business Should Be Financially Transparent
Smart Business Revolution

Neville Joffe is a financial literacy expert, author, and executive educator. He turned his 400 unionized employee company back to profitability through profit-sharing with his employees. This success was largely due to him teaching his employees the financial implications of their decisions. He subsequently developed a patented award-winning interactive, multi-sensory game-like tool to teach business acumen to non-financial business leaders and entrepreneurs. 

Over the past 22 years, Neville has brought his work to many global companies, including IOTA, Hallmark, Bombardier, and Campbell Soup. His financial literacy training programs have transformed corporate cultures at all kinds of different levels, and he was a past case protagonist at Harvard Business School.

In this episode of the Smart Business Revolution Podcast, John Corcoran is joined by Neville Joffe, a financial literacy expert, author, and executive educator, to talk about Neville’s gain-sharing method for company employees and how he helps companies navigate through the process. Neville also discusses the importance of business owners being financially transparent with their employees and shares examples of companies that have implemented this successfully.

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Here’s a Glimpse of What You’ll Hear:

  • Neville Joffe explains what gain share means, how he introduced this program to a 400-employee factory, and the challenges he faced in the process
  • How the gain share program affected the company and the behavior of the employees in the factory
  • Neville shares the financial transparency strategies that he used with the factory and its employees
  • Neville gives examples of employees taking greater ownership in their company, of companies that use his gain share program and the challenges that came with its implementation
  • How Neville’s full transparency method works
  • How a company with employees working on an ongoing basis can determine its KPIs
  • Neville explains why he prefers gain sharing over profit sharing and what happens to the business owners’ share
  • The people Neville admires in his industry and those he acknowledges for his achievements and success

Resources Mentioned:

Sponsor: Rise25

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Episode Transcript

Intro  0:14  

Welcome to the revolution, the Smart Business Revolution Podcast where we ask today’s most successful entrepreneurs to share the tools and strategies they use to build relationships and connections to grow their revenue. Now, your host for the revolution, John Corcoran.

John Corcoran  0:40  

All right. Welcome, everyone. John Corcoran here. I am the host of this show. You guys know my story. I’m a recovering political hack and a recovering lawyer. I spent years working in politics, and also practiced law for a bunch of years and 10 years ago, I discovered this medium of podcasting and I’ve been doing it ever since. And over 10 years of hosting the show, I’ve had the great privilege of talking with so many great top CEOs, founders and entrepreneurs of all kinds of different companies and organizations, ranging from YPO, EO, Activision Blizzard, Lending tree Open Table and many more. I’m also the co-founder of Rise25, where we help b2b businesses with the strategy and production they need to create a podcast that produces tremendous ROI and connects them with their ideal prospects and referral partners. 

And before I introduce today’s guest, I want to give a quick shout out to my friend Dov Gordon. Gordon is a great guy, Google his name, a real giver, and he organizes, he’s got a group of different business owners that my guest and I connected through and I’ve been a member of it for about six or seven years now. Just a bunch of given bits a bunch of giving business owners is supporting one another exchanging ideas, exchanging, you know, introductions, supporting one another, and I just love the philosophy behind it. And so that’s why I’ve been part of it. So my guest today is Neville Joffe. He turned his 400 unionized employee company back to profitability through profit sharing with his employees. This success was largely due to him teaching his employees the financial implications of their decisions. And he subsequently developed a patented award winning interactive, multi sensory game-like tool to teach business acumen to non-financial business leaders and entrepreneurs. And over the past 22 years, Neville has brought his work to many global companies including IOTA, Hallmark, Bombardier, and Campbell Soup. His financial literacy training programs have transformed corporate cultures at all kinds of different levels. He even was a past case protagonist at Harvard Business School, which is quite a big honor. So we’re gonna get into that in a second. 

But first, before we do, this episode is brought to you by Rise25, which helps b2b businesses to get clients, referrals and strategic partnerships with done-for-you podcasts and content marketing. They specialize in b2b businesses with a high client lifetime value. To learn more, go to All right, Neville, I’m super excited to talk to you. And I want to start with a story you wrote about in your book, the book is called “The Bakers Dozen Rules of Highly Successful Business Operators”. Super cool book, looks like a cookbook, which is really neat, the way that it was all laid out and all that kind of stuff, which is appropriate. But you tell this story of walking into this factory of 400 people and doing something a little bit shocking.

Neville Joffe  3:23  

Johnny, I get a lot of shocking things. But this one is particularly particularly interesting. We, this is the early 90s, late 80s, early 90s, we were facing a lot of financial stress, largely due to NAFTA at that time, higher level of inflation. And really dealing with a deflationary environment, we consumers will not pay to pay more money to go into union negotiations and meet certain demands that had we made these demands, the company would have gone bankrupt, were absolutely certain, talk over the union and say, Look, we need you to do something in this organization and change it forever. And that’s in the interest of all parties. But by signing this deal, we’re not going to last long. So I have a philosophy that nobody washes a rented car, there’s no sense of ownership. So using those thoughts, I managed to secure a wage freeze for three years in support of a game che program. Now again, she’s different ; your profit share means you share all the profits. Gain share means that you only share the incremental gain above a certain hurdle rate. But it was really hard to get our non financial employees at every level blue collar and white collar people to understand the financial implications of what I did. So the first thing I did was I had an internal accountant teach it bad mistakes, understanding it and teaching it are two different things.

John Corcoran  4:57  

What was that like? Yeah, that can come true. So

Neville Joffe  5:01  

it was so painful.

John Corcoran  5:04  

I can imagine. Yeah.

Neville Joffe  5:06  

Yeah, they’re not cold in a college prof who simply does the wrong thing more efficiently? If that’s the name of one of my chapters, don’t do the wrong thing more efficiently. That’s wonderful. That’s funny. bookkeeping on steroids. I thought, this is not gonna work. So I thought, and I’m losing a lot of credibility, you know, with a union and with my partner, by the way, who was a generation older than myself, who was totally opposed. Excuse me. I’m sorry, it was totally opposed to financial transparency.

John Corcoran  5:40  

And at this point, were you transparent transparency? So at this point, were you transparent? I mean, good point. Okay. So you’re marching down there

Neville Joffe  5:48  

trying to become financially transparent? Yeah, yeah. But he was totally opposed to it. And I thought, What am I gonna do here with us, because it’s this, I knew we could scrape the profits off the floor in this company. So I call the meeting. And I cashed $1,000 in small bills, and I crumpled them up into, like garbage bags, and no one was thinking about this, and I called the meeting with a union with all the employees with a partner and his family. He was a founder of the company, by the way,

John Corcoran  6:15  

his family there, too.

Neville Joffe  6:17  

Oh, yeah, your family there as well, because they were on side with anyway, How

John Corcoran  6:21  

long had you been that you’d bought into this? You’d bought a minority share in the business? How long have you been around at this point? When you did this is

Neville Joffe  6:28  

my fourth year in the company.

John Corcoran  6:30  

Okay, so you’ve been there for a bit?

Neville Joffe  6:32  

Yes, we’ve got the company stable. with a bang, we weren’t making any, any profit. off, it’s really to speak of trouble. But I always always had this vision of ink magazines coming with a video camera and filming this model company, I could taste it, I just couldn’t get there. Yeah, you’re standing on these tables in the back of the factory, I had had all these bags of cash. Honestly, I know you will struggle to learn this stuff. But now I’m going to give you a demonstration that you will never forget. Anyone looking at each other thought what’s going on here and not turn these back always backs down, pulling up all this cash. When I looked at the single cost, what, not two handfuls of cash into pre labeled, put them up level buckets, you know, called labor fabric, process, rent and so on. And then other buckets called waste. And I had some $20 bills in my pocket, and I pulled them out and started tearing them up. And I put the coal race and people were freaking out. So why are you freaking out, you do this every day. I did take them together again afterwards. But no one knew that. And then we had some cash left to the end. And I think this is called profit. Cut the pile in half. I said this half is for the owners of the company for the risk that is taken to keep these doors open. And the other half is for you to share equally between each other. Equally being the operative word and everyone looked at each other and thought well hang on a second. You know, the guys in the office who are at revenue level, this is not reasonable. I mean, it’s not fair that somebody who’s earning that didn’t give numbers. But who knows, let’s say 60 grand a year working in an office? Why should we get somebody working on the shop floor earning half the amount in the same amount as me. 

John Corcoran  8:18  

So you mean totally equally. So if there’s 10 employees with $100 in profit, then they each get 10 bucks, even if one of them made 100 grand a year and one of them made 50 grand a year? Exactly.

Neville Joffe  8:30  

Okay, let’s see, here’s why. You get paid a salary for your skill. And you get paid a bonus for your heart and soul. I have a huge moral issue. paying somebody who’s earning 100 grand a year, who comes to work there, just do what they’re supposed to do and go home. Getting the same amount of money as somebody on the shop floor who’s always willing to help, always coming up with new ideas, always going above and beyond their expectations and putting their heart and soul into the company. So each of you will be considered, like equal shareholders and others each of you are getting a dividend. I never had another argument on that one.

John Corcoran  9:14  

Wow, after that, that’s a great argument.

Neville Joffe  9:17  

But a lot of good things happen, John. What happened was suddenly there was collaborative effort going on, there was teamwork, because they all became accountable to each other. There was interesting arguments and very colorful conversation between the sales people and the factory floor because I’ve taught them The Theory of Constraints caused them to understand the use of scarce resources and certain educated to help them understand how the efforts and product mix and customer mix and so on, could generate more contribution towards overhead in the company. 

John Corcoran  9:52  

This was a learning curve for me, there was a lot to unpack what you just said there. So explain to me these arguments between sales and the floor. Okay, so why The chapters in my book or read, news vanity.

Neville Joffe  10:05  

Profit is sanity. And cash flow is reality. Yep. So all you should do is govern the success of the company based on the fact that they’re working 24, seven or really busy and generating revenue. But they didn’t connect to what’s the word profits and cash flow. So the matrix that I had to create an understanding, I had to get into the minds using various forms of communication, a lot of them unorthodox, like one of them are tearing up money, I didn’t do that again, by the way, but just help them understand using using context and using language that could understand they weren’t stupid, they just weren’t trained in the skill, right? To understand the implication of profit, understanding what they were selling, and to whom it is understanding the whole power of product mixing customer mix. I’m putting together here three years of education into just a few minutes. Yes, it’s a big topic, worthy of a lot of discussion. But the longer the short of it was. Not everything interesting is useful. Another chapter of my book, not everything interesting is useful. So I simplified everything through using KPIs and metrics that they could control. These Predictive Control. So we shade financial information that was meaningful to them, that they could control and be rewarded as a result they’re off. Another big topic here for the listeners here, John, is that I had to create an environment where I had the license to make mistakes . They were just waiting to shoot me down on this. So I told everybody, we are going to learn together, we are all going to make mistakes. But we are working for common ground and common cause a common agenda. We all want to be enriched as a result of our collective efforts in this company.

John Corcoran  12:07  

And how did you see how behavior started to change as you got them to buy into this vision.

Neville Joffe  12:17  

It was remarkably simple, but not easy. Another chapter in my book, I’m making reference to this because that’s what this is all about is that you need to measure to manage. You cannot manage your business, you cannot manage your health to kind of manage anything if you don’t measure it. Yeah. So I created simple KPIs. And every Monday morning, we would analyze the results of the previous week with flip charts and flip charts in each department. And going through them and debating them or discussing them and presenting them, we would work through the good, the bad and the ugly, or what it worked, what didn’t work, and how we would manage it. But we also use what I call a concept called quality circle. Have you heard of this? quality circle quality circle is a Japanese philosophy of communication. We would literally stand in a circle at each of these departments. We did it also globally from Easter from all the departments and discussed why we should teach the Theory of Constraints understanding the constraints in organization that must stop you from achieving what you need to achieve. So the salespeople in answer to the equation, the salespeople may say we’re going to want to get out of 5000 units for this week. Okay. 3000, which are customized. Let’s go through the constraints. Do you have the fabric? Yeah. Okay. Do you have the design capacity? Yeah. Do you have a certain capacity? Yeah. Do you have a particular resource like a folder or something? Somebody said, No. Okay. There’s your constraint. So until you can live with that constraint, or find the resource to deliver that part of the process, this order, not going to go out. So they learn to understand constraints, by the way, could be an attitude. And we had some attitudes, and we elevated those attitudes or got rid of that man we did. In fact, I didn’t, the employees did. How did that work?

John Corcoran  14:14  

They were like, what were they like calling out other employees? Like this person has a bad attitude?

Neville Joffe  14:18  

Oh, absolutely. Yes, because they’re all sharing the same profit. So they all had a vested interest in making the system work. They needed more throughput, throughput as an output without elevating costs.

John Corcoran  14:30  

Did you get employees involved in hiring after that point, or are they just more involved in enforcing, though,

Neville Joffe  14:37  

you know, we weren’t at that level at a more senior level than we did in sales people because their works are in conflict with each other. I didn’t do that. I certainly got people involved at a higher level. Yeah, I was that the other way. I sold up my interest to the original owner. After my eighth year in the company. His passion to keep it was firing them. To buy the balance of the company, the reason why I mentioned that is because I suspect that had had I been in this company a lot longer, or both the entire company, I suspect that my employees would have been involved in to some extent with regard to the hiring process that the hiring wasn’t at that point.

John Corcoran  15:17  

What about after you had taught your employees the importance of financial literacy, and they started to understand reducing waste and being efficient and all that kind of stuff? And then did you like bringing them in like a monthly finance meeting where you brought the books out? And you know, okay, Hey, guys, here’s what we did last month. Here’s our, here’s our p&l. How did that work on an ongoing basis with your employees?

Neville Joffe  15:43  

Okay, so I have to be, first of all, I had to be very respectful to my partner who was a generation older than myself, he was a founder of the company. And he was quite opposed to financial transparency, so I had to be respectful to him to this wasn’t my show. This was our show. So what I did was, and I recommend to anyone who’s considering this, this all depends on the culture of your organization, the culture of your partners, the culture of your leadership in the company, what’s going to be respectful, I used the term earlier on in this conversation, not everything interesting is useful. So what we did was we disclose on a monthly basis, our p&l based on what they could control, the all new the revenues, the new, the new fabric usages, they, they understood, variable costs, such as commissions, and e-commerce fees, and so on. We didn’t include rent, for example, although they knew the rent, we didn’t include it in the operating profit because they couldn’t control it. So what’s the point of putting rent in what’s the point of putting accounting fees in there couldn’t control it. So we call this the controllable operating profit of the business. Okay, that was what is used to contribute to all the other expenses that never saw the owner’s drawings, they never saw, it was that it’s irrelevant, it’s a brings off No, it’s of no value that did have a say in capital costs. Because they had to demonstrate if you’re going to be spending money on new equipment or revamping equipment, you have to understand the link to the p&l and how to bring incremental value to the company before will make a spent. So we had ways of actually communicating understandable way that we share notes of handing out p&l and balance sheet.

John Corcoran  17:28  

So you let’s say that one month showed $100,000 net profit before withdrawing the owner share and before the share that’s going to the employees, so you just show them that raw number, and then you tell them that a portion of that is going to go to them.

Neville Joffe  17:49  

Okay, so everything is relative. So when we showed a knit number attached to me relative as well to how much money we invested, if that’d be the case, because we could have invested say $500,000 in equipment while you video generates a heck of a lot more contribution margin to cover their cost. So they all had a say in it, they all had the partner that made the decision making process before the company would blow a lot of cash out the bank that you need to understand you can make a great profit but how are you going to pay the bills? What do you pay the bills with so slowly we’ve got them to understand that say every Listen, all different contract companies are different. They’re different drivers to drive profits in the organization, the different levels of transparency that people are willing to expose themselves to in the company. And as people get used to this, you find the level of transparency tends to increase in our seniors of my clients over the last 23 years. As you get you should realize there’s nothing wrong with sharing this information.

John Corcoran  18:47  

Right and they start to see the employees start to take greater ownership. So give us some examples of ways in which you saw employees taking greater ownership.

Neville Joffe  18:57  

Okay, so for example, I’ll give an example of a company I worked with in Germany. They used to bonus the people on two elements to new accounts, usually engineers use it. These are chemical engineers selling very high tech, chemical products to industry. So there are two kinds of products that were selling one was a very price sensitive consumable product very pricey and on the margins were like paper thin. The second product is sold if you will, with professional services, these were all engineers and I saw the professional services which is very lucrative because of it. One of the one of the drivers was on revenue that would be pushing the low margin consumable product, generating huge revenue with really very, very low margins. Got it? So we changed so I they retained me to give it a two day business literacy education. program. Within this, what we did was we got them to understand the principles of fixed and variable costs. And the principle of contribution. I won’t do a deep dive here in this environment, but I’ll give you a high level overview. But what we also did was we said, What is the contribution margin for the company and per person per month, you’ve only got 40, we work 2000 hours a year, 40 hours a week, times 50 weeks, two weeks, you’re on vacation. That was the base. So we said how much contribution is each salesperson generating now they wrap their head about 200. And something salespeople so what we did was we did an analysis, we found a 300% variance between the lowest contribution the highest contributor, the irony was at the lowest contributors were selling the highest, the highest revenues. The highest contributors were sending a lot of professional services.

John Corcoran  20:57  

And they never realized they’d never realized this before.

Neville Joffe  21:00  

They probably did. But they never really got the people to understand it because they were just pushing the wrong the wrong buttons. They were just using the wrong KPIs. Yeah. So we changed the incentive program, we said we changed the measurement of success, your contribution margin per person, per month. Now, obviously, what happened, and suddenly they became very acutely aware of how they were using their time. They’re also hired, they’re hired a, a, an administrator, administrative individual to serve in the numbers for five salespeople at a time. So those sales people shouldn’t be using their time on administrative stuff, or chasing orders when somebody else for 40 grand a year can do that. Right? They became very discerning who they sold to, hmm, they’re sort of pushing the professional services rather than widgets where they could get administrative people to be calling to sell widgets.

John Corcoran  21:59  

But that’s what I was gonna ask about. So then did you have to change the sales commission structure? And I did? And was that a difficult sell? Because sometimes it’s hard to talk sales people into changing their commission structure.

Neville Joffe  22:10  

Sure, it was easy for those people that bought into the change, and just tough for those people that wouldn’t, and they disappeared real quick. Got it? There you go. Because my philosophy is, or you’re a heartbeat, or a sales professional, hot beats we can buy anywhere. Sales Professional is a different animal. Mm hmm. To learn to sell the value of what you represent to here’s another thought for listeners. Yeah, John, I believe that when a salesperson goes out to sell, the moment this sale is made, they are part of the customer’s problem. Give us a lot. Why, here’s why. Because this sale represents revenue on your p&l, that’s an expense on your customers p&l At that moment, you’re their problem. It is incumbent upon a sales professional to learn the language and understand the business case on how to explain and deliver the incremental gain to the customers, you know, above and beyond what it’s costing, until you can demonstrate that and actually deliver on that you are part of their problem. They separate, this separates a hot pitch from a sales professional. Hmm. Yeah, definitely order takers from professionals. And that made all the difference in the world to this company. It just, it was a total game changer. And I’ve seen this happen over and over again.

John Corcoran  23:34  

Tell us about some other clients that you’ve worked with and to implement this model and, and you know, some of the pros and cons of it or the challenges with articulating it to the employees.

Neville Joffe  23:49  

Okay, so working with very large publicly traded international companies I’ve worked with, it’s far more difficult because in every state changing the incentive program, I have been successful with a couple of them. One of them works with a ratio, Corona returns on IT assets. Again, we’re not going to do a deep dive in a chair. But essentially, everybody touches it. There are $4 billion international publicly traded companies, they changed their model as a result of it. But in the main, I’ve seen the positive impact of this type of concept. I’m talking about non financial literacy, we do it with a lot of large corporations in it. But in terms of changing the incentive program, and changing the behaviors, because of the incentives are scaling entrepreneurial companies. That’s where I’ll see it happening. Because as an entrepreneur cannot do it alone, John, you cannot do it alone. They need to engage and embrace and make accountable and instill in accountability with all the employees. But to do that, you’ve got to give them a reason to change. They’re not going to do it for the sake of but you gotta get what’s in it for them. By the way, money is not only motivated, which is what I’ve experienced as well in the past, right.

John Corcoran  24:59  

That would have been, that would be a counter argument to this would be that, you know, and there’s a great book by Dan Pink “To Sell is Human”, which says that people are motivated by mastery, autonomy and purpose. Not so much by money. So that would be a counter argument people would make that, you know, we don’t need financial transparency. That’s not what motivates people. It’s more that they’re motivated by recognition. And they’re motivated by giving autonomy to do their work and having the feeling of mastery over it.

Neville Joffe  25:31  

Yes, and executive to that point, by opening it by having a level of financial transparency and engaging and educating your people to work with you, as a leader to make fiscally responsible decisions. And participating in the game they have is bigger than the actual financial gain itself.

John Corcoran  25:52  

So actually, the feeling of being a part of it, I guess, that goes to the mastery piece, then probably, as I was describing, yeah, feeling that mastery over the business. Yeah, yes. Yeah. And so getting back to what I asked earlier about, you know, you said, you know, you had the owner, founder of the business, and in your company where he was against the full transparency, if you have a client that comes to you, and is willing to go along with your vision of full transparency. What does that look like? And again, do you like, have a monthly meeting with all hands meeting all employees going through the p&l going through every single number? Or is it like you described earlier where you just disclose the pieces that they have control over?

Neville Joffe  26:42  

It’s a slow process, John, the problem that I had, and I made this mistake, is that I always knew it. Somebody mean, what was it? I was totally naive. I mean, I had no idea. I bought a book about open book management once and I realized, wow, this is a pretty cool idea. But I was brand new at this. I lived way too fast and tried to convert my partner again, generations older than myself. Yeah. Very old school thinking I’m gonna make it 30 years ago. Yes. And it’s hard to believe someone can be older than me. But he was it, it was a huge leap for him to go from zero transparency to opening up the book. So I had to learn to slow down as well, because there was a lot of friction. Yeah. So if I would say, if I were to give advice to anybody who’s considering this, and I would really recommend this, I can tell you, I’ve seen it work over and over and over again, you know, stepping aside for a moment, Einstein’s definition of insanity is making you do the same thing over and over again, you get a different result is not going to happen. Yeah. So if you want to sleep while at night, you need to get your people engaged, but it’s a slow process. So if I may ask, you answer your question for you. Sorry, I went around the bush? And I’ll answer. So first of all, people ask, How much? How much? How many KPIs do you need? And how many missions do you need? My answer is, the less the better. But don’t overwhelm people with too much information. So you start this thing for real so the first step I do work with entrepreneurs is I get them to take my course and learn to understand the financial look, be financially literate yourself, because I can tell you that the most significant majority of non financial entrepreneurs are less than 40%. Financially illiterate. Less than, yeah, so what chance do they have in being successful on their own cognizance number one, anybody else if they don’t understand the financial implications to what they do, or managing expectations? So that’s the first tip, then you need to get everybody else to understand the context that revenue doesn’t mean profits, and profit doesn’t mean cash in the bank, they get some context. And it’s not fair to oneself as a business owner, when you see all these revenues. And so look it up bosses guys earning a fortune is generating $6 million a year in revenue. Can you imagine how much money is making? That’s simply stupid? Yeah, yeah, I’m not sure. But it shouldn’t. It’s naive. And it’s not really fair to oneself to educate them.

John Corcoran  29:11  

What do you say to someone who says that, you know, insert an example of some company out there that doesn’t have sprint, transparency, and yet has managed to be successful in spite of that,

Neville Joffe  29:23  

there could have been a lot more successful. And then I slept a lot better at night while everybody else was awake, but thinking about it. And that also makes them vulnerable. Because there’s another concept here called the deprivation test. It’s not a question of if I put it in the book or not this is called the deprivation test. deprive yourself of the resource and see what happens. including you. If you step away and want to go away on holiday for a month. Do you think your business would survive? If not, you better get your act together and get people to act. On behalf of you. They can act and think like you the owner. Yeah.

John Corcoran  29:59  

Stepping back to The KPIs that you mentioned, sorry, we’re bouncing around a little bit here. But with the key KPIs, how do you advise a company that has ongoing tasks? But what is the KPI? How do you determine a KPI for the people that are just kind of doing the work and then on an ongoing basis or, you know, the janitor in the warehouse, their job each day is to sweep the ground? Like, how do you create KPIs for people like that?

Neville Joffe  30:27  

Okay, so the main not everything is interesting. So it’s a question of does activity move the needle? In the beginning, you’re gonna you’re gonna focus on the on the more important stuff that has the biggest impact, and then you can start refining it down, I want to start with the vast sweeping the floor, because yeah, it may be it could make a difference, because we sweep quicker, cross train you to do something else. Mm hmm. You see the way you see where you can push the envelope on that it’s not about sweeping the floors by the utilization of resources. So I can get more output with the same labor without increasing my cost that comes across training. And I did a lot of that. So you start with the meteor stuff. And you create KPIs that can move the needle, but it’s incumbent upon the person who’s doing the education in the business, or the bookkeeper to be trained in us with the accountant to link all the dots together. Don’t look at there’s another chapter in my book called don’t examine numbers of isolation. don’t examine numbers in isolation. So sweeping the floor isolation has zero impact on the company, by looking at that number in the context of their total labor force and output as a lot of impact if we teach them how this can actually matter, to their bonus program. Mm hmm. Yeah, there’s got to be context to it all.

John Corcoran  31:46  

Yeah. Do you find that there are certain portions of companies or entire companies that just don’t take to this financial literacy? Yes. For the volume, they start at the top of the bottle, John.

Neville Joffe  31:59  

Remember what I’ll say? It may be simple, but I didn’t say it’s easy. I really mean that. Yeah, it really is simple. The seller for more than cost you. 2000 sales? Yeah, it’s very simple. Because we’re talking about a culture, we talk about a change of culture, which is a change of culture. And I have to tell you that not everybody is willing to, nobody was willing to expose the numbers, I’ve seen my share with other people, I’ve worked with a lot of associations, they say, Look, I’m just not prepared to share my numbers as well, that’s fine. It’s not for you. And that’s okay. Keep doing what you do. But then stop complaining that your people are making stupid decisions. So you can’t have it all. You got to make a decision, whether you want to be transparent or not. And again, I’m going to repeat this because it’s important, you don’t do everything at the same time. This is a slow process. And you and the owner have to become comfortable sharing these numbers. And realizing there’s no harm in doing that. In fact, it’s a huge benefit to doing that, because people don’t make stupid assumptions.

John Corcoran  32:59  

Yeah, well, for me, I mean, a couple of things that you said that I think are reassuring, as an owner, is that you said that you don’t share the owner’s share, you don’t explain what the owners share of that profit is going to be? And also the fact that it’s gain sharing, not profit sharing. So do you want to expand on that a little bit more? Because I know, we kind of glossed over earlier?

Neville Joffe  33:23  

Yes, yeah. So an owner is entitled to a return on the time and risk and the time and money investment. And the risk? I mean, they’ve got the house on the line, right? I mean, how many owners are shooting me down the road where I’ve put my home on the line? loses business? My home has gone? Yeah. And entitled to be rewarded for that. And sometimes, and not some of the always people should understand this in your business, not necessarily numerically. But they should understand this philosophy philosophically, in answer to your question, is that you deserve it of having a certain return for your investment in this company before you’re willing to share it with your, your new, your new partners, if you will, they’re almost like, they’re I mean, they’re your partners, they got Phantom shares in a way that was like Phantom shares. But you’re entitled to a certain return before you start sharing. So if you say to yourself, look, I’ve got $100,000 of net capital invested in this company. I’m on the hook for this. That’s 100 grand worth of equity I have in this company. Being a privately owned company, I expect at least a 25% return on my investment. I can get 10% anytime of the day on bridging financial mortgages, and I have good collateral and I deserve more for the risk that I’m taking because it’s all by risk and reward. And I’m just using arbitrary numbers here. So you can tell if I expect 25% return on my investment and office I wanted to share 30% of the gain with all of you. I think I should get 70% because I’m taking the bigger risk, but I want to share 30% With all of you above that mean, whatever proportion you’re like.

John Corcoran  35:04  

Now, the other thing that’s completely fair, but it’s up to you to come up with those numbers and come up with a percentage, I shared 5050 because we were in such trouble. And we are 400 people. And in the absence of giving them something meaningful, this company would not survive. And do you find that when companies unveil that number that the employees are grateful? Because it’s something that they didn’t have before? Or do you find that they push back? Or is there a benchmark for what that split should be?

Neville Joffe  35:32  

Well, there’s no benchmark, because it’s entirely up to you. But you got to go back and ask yourself. And you remember, you got to use the smart principles. It’s got to be if you heard of the smart principle, yeah, it’s got to be specific, measurable, attainable. Yeah. Yeah. But ask yourself, Is it fair to ask them to bust their heads over this to earn another $20 for the year? I mean, that’d be ridiculous, right? I’m, you know, I’m not going to go to the wall here for 20 bucks a year. So you gotta ask yourself is he the objective is the target that we’re aiming for realistic, is the share going to be worth a while. Now, for somebody who’s earning say, 50 grand a year, they can make $2,000 I think that’s pretty meaningful. That means a vacation for them or whatever, that’s pretty meaningful to somebody earning 200,002 grand is not particularly meaningful. So you gotta get a perspective, what is meaningful to people? Okay, there’s another perspective here, something which I did. And what I did was, I had I included paid supervisors and decision making people in the company, what I call the influences, I paid them double a bonus. However, the additional portion came out of the company share, not out of the employee share that has been specified, there was no conflict of interest. Oh, interesting. So came, they came out of your amount for the supervisors. But there’s anyone for what are called decision makers or influences. Choose your own language however you want. If it was, I feel they would take responsibility for those people under their wing, people who answer to them and they were responsible. So they got double the bonus got it got

Neville Joffe  37:10  

no jealousy, because it wasn’t coming out of the employees pool. And I wasn’t impacting them in any way. I got it. Got it. So it also encouraged people to grow. Because if you want to get double A nothin, increase your skill set and take on responsibility, and we will pay for it, we will educate you too and we did with a number of people, get them on supervisors, courses and training courses we paid for it.

John Corcoran  37:31  

Now. Interesting, interesting. Well, we’re running a little short on time here, never. But this has been really interesting and informative. I want to ask two questions to wrap things up. First, I want to ask, you know, I’m a big fan of gratitude. And as you look around at, you know, other peers, maybe others in your industry, others who are teaching financial literacy, like you have, who is it out there that you admire, or you respect the work that they’re doing?

Neville Joffe  37:58  

I know, this is a bit of a stretch here. Because I was looking at I’d have lots of mentors on my three sons who are fabulously successful, I look at them as mentors in certain ways. I’m so jealous of their age. Now, but one person I’ve always looked at, and I have the most unbelievable respect for him is Richard Branson. The guy’s dyslexic. He’s been knighted, he runs our 2000 companies. He has a totally transparent environment, of engagement, and embracing people. He loves the people that he works with. He’s just a remarkable individual. And I’ve often tried to take pages out of his book, if you will, it’s a proverbial book, you follow his example, of authenticity, openness and vulnerability. He demonstrates his vulnerability. I say things are wonderful leadership attributes. I try and follow a lot of those in my own practice.

John Corcoran  38:56  

Yeah. Why do you think he’s been able to start so many companies and manage so many companies overseas, so many companies, delegates?

Neville Joffe  39:05  

And that’s exactly what I was talking about earlier. You cannot learn? Yeah, he’s not the constraint in his company. So here’s to you, when we when we are the product, we are the constraint. You need to elevate the constraints so that your people your system becomes a product, not us as individuals, and that’s what he’s done very well.

John Corcoran  39:24  

That’s great. And then the last question, final question. Let’s pretend we’re an awards banquet, much like the Oscars or the Emmys and you’ve never received a Lifetime Achievement Award for everything you’ve done up until this point, but we all want to know is who do you think, you know, in addition to family and friends, of course, was was thank them, but who are the colleagues who are the mentors, peers, business partners, you know, who are the people that you would acknowledge any remarks?

Neville Joffe  39:47  

Well, the people from way back when was my old partner who actually changed my life, not only about what he did, there was write about some of the things that I disagreed with him on and it helped me elevate myself, I’ve done lots of wrong things myself, though it’s not to say that I don’t do things wrong, but a lot of his his philosophy of thinking, which is very narrow at the time, he taught me how to get above that and it taught me wonderful skills, I’ll be able to last me grateful to him. My wife of 43 years 111 needs a partner, whether it be your wife, or somebody who you can lean on is not going to judge you all the time, I think is really important. My wife and certainly my boys have been ourselves or cornea. But it’s happened to me. For me, it’s been very true. I’m an avid reader, and more of lately, I’ve you know, I’m sharing this book. You see my screen here.

John Corcoran  40:43  

Love is just data, but by Steve Farber. Yeah, he fava

Neville Joffe  40:47  

the wonderful guy I’ve met is not Steve. I’ve attended his conferences. His latest book called Love is Just Damn Good Business. Love is different, loving your pizza and loving your wife and loving your business, the different kinds of love, he advocates embracement and love of what you do in your company, and creating the kind of culture and I’m a strong advocate of that. And when I met him, I saw his book, and I bought one for each of my boys, and I bought them for the clients. Well, if he embraces the philosophy, he doesn’t talk about financial literacy per se, but the culture of what he does to me, he says way up there. So I love this kind of thinking. I’m an avid reader, and I certainly suggest to our listeners can read and read a

John Corcoran  41:32  

great novel and where can people go to learn more about you, connect with you and learn more about what you do?

Neville Joffe  41:37  

In case you didn’t notice I love a good debate. Passionate, but what I’ll do is let them contact me at [email protected]. I’d love to connect with you. I’d love to get you a copy of my book and have a chat with you.

John Corcoran  42:00  

The Bakers Dozen Rules of Highly Successful Business Operators by Neville Joffe, foreword by Brian Smith, the founder of UGG. Very cool. Yeah, Neville. Thanks so much.

Neville Joffe  42:13  

You’re welcome, John, a pleasure speaking with you.

Outro  42:15  

Thank you for listening to the Smart Business Revolution Podcast with John Corcoran. Find out more at and while you’re there, sign up for our email list and join the revolution. And be listening for the next episode of the Smart Business Revolution Podcast.