Weekly Bookmarks –
136th Edition – September 12, 2021
As the leader of a decent-size public company, I could stand here and say it’s about big words like Vision and Strategy, as well as Results and Shareholder Value. Well, not really, it’s mostly about relationships.Kent Taylor, Founder of Texas Roadhouse
1. Let’s Roll
It appears I’m not the only person thinking of Todd Beamer this time every year:
- WSJ – Remember Todd Beamer of United 93
- Independent – Who is Todd Beamer?
- Newport Buzz – The Todd Beamer Story
‘Let’s roll’ were two of the last words uttered by Todd Beamer while he was traveling on business on United Airlines Flight 93.
Lisa Beamer’s book, Let’s Roll! is inspiring, moving, and even thought-provoking.
2. Remembering Kent Taylor
Kent Taylor left this world too soon. He was one of the good guys in American business who kept plugging away until he got it right.
If the name does not ring a bell, Kent was the founder of Texas Roadhouse. Just how good is that chain?
On February 21, 2020 their stock price was $71.52. Within about a month, the stock fell to $35.26. Later in October, they were over their February stock price. Not a back comeback. As of this newsletter, the stock was trading at just $91 a share.
What’s the secret sauce?
3. It Starts With the People
By the end of 2019, Texas Roadhouse had more than 600 stores. Stores averaged more than $5.4 million annually. Going into the 2020 crisis, the company had more than $100 million in cash on hand. They had no debt.
But here’s what I appreciated the most as I started reading Kent’s story this past week. Here are just a few things they did with their staff during COVID:
- They never waivered in their objective – keep paying their staff members and feed America
- Kent donated his entire 2020 salary to frontline employees
- He also donated $5 million to the company’s employee relief fund
- Texas Roadhouse kept hiring during this period when peers were laying people off
Overall, the company dumped $15 million into its employee relief funds. As staff members (called Roadies) got their stimulus checks from the fund, patrons took note by lining up in front of stores to place orders.
The focus on culture shows based on the American Customer Service Index revealing the high ratings at Texas Roadhouse.
If the Texas Roadhouse story interests you, Kent’s book is entitled, Made From Scratch. Sadly, he passed away before the book was published a few weeks ago.
The Texas Roadhouse compensation structure for store managers (they call them Managing Partners) calls for an investment of $25,000 in return for 10% of the store’s bottom line. If they hit certain performance targets, they can get back $100,000 which starts vesting by the fifth year. Other kickers start after that fifth year.
That’s part of the Texas Roadhouse compensation philosophy which was created by trial and error over time.
Speaking of compensation philosophies, if your company does not have one, I recommend the latest book by Verne Harnish, Scaling Up Compensation. I thought he nailed it.
5. Favorite Lines from Verne’s Book
- Compensation plans need to be fair in the sense that employees feel their salary is an expression of an employer’s respect, appreciation, and equitable treatment
- … generous living, not minimum wages
- One great person = three good people
- ” … create a place where people could come to work and pretend they were volunteers.”
- More money does not necessarily buy more happiness, but less money is associated with emotional pain.
Incidentally, I agree with Verne’s definition of a compensation policy:
A compensation philosophy is a written statement that outlines how people in your organization are paid and why. Its primary purpose is to serve as a “constitutional framework” for those responsible for shaping and operating the compensation system.Harnish, Verne; Ross, Sebastian. Scaling Up Compensation
Title Photo Attribution: Mike Mozart
The CFO Bookshelf Podcast – The show notes page has not been published yet, but my conversation with Ron Baker has been published wherever you listen to podcasts. Our topic was his book, Mind Over Matter, and will probably be one of my favorites of all time.
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Always be learning and growing.