Improving Team Performance Through Elimination | Ep 995

**Alex Hormozi** (0:00)
I think that people have talked about culture in a lot of different videos and books, and the first thing that they do not answer is what a culture even is. And so, they don't even define the thing that they are trying to help you, quote, build. And so, I'll start by defining what culture is, and then I will give you the 80-20 of what it looks like to build one in a way that yields high performance. So, culture is the rules that govern reinforcement, aka reward and punishment, in a business.
Now, what does that mean? Is it just this big list of rules? Well, sort of, and they're often spoken and unspoken, mostly unspoken. And people learn them the way that they learn everything, which is through action firsthand and observation secondhand. And so, if someone shows up to a meeting late and it is someone's first week and no one says anything, they learn, through observation, that showing up is okay. If I show up, nothing happens. That is a rule. If, then. Right? Now, if they then show up and they are scolded, then they find out an additive to that note, which is if that person shows up late, nothing happens. If I do, I get in trouble. Or, my boss cares and that boss doesn't.
And so, what happens is we develop this lattice work of understanding of like, where do I get rewarded and where do I get punished? And then our behavior orients around that. And then when that happens systemically, we then describe the systemic behavior as the culture of the business. These are the spoken and unspoken rules of what gets rewarded and what gets punished in the business. And so, if we think to ourselves, okay, this is the list of rules, and people learn through observation and through doing themselves and getting feedback, then to create a culture, it would mean that we would need to model the behavior that we want and reward as, you know, chief reinforcement officers, if you're the person who owns the business, the behavior we want and punish the behavior that we don't want. Seems pretty straightforward. The issue is that it happens 24-7, 365, and it's happening in teams that you are not involved in, which is why you have to start cascading down through leadership the same behaviors to the leaders who then cascaded down. Now, I'll give you the shortcut, the 80-20 on making this work. If you want to have a high-performance team, the biggest signal that you can give, even more than promotions, and promotions are very big, is who you fire. Now, I want to be really clear about this because I think it's so important. I'm not saying have a fire everybody culture. I mean, you can if you want, but it's more so the minimum bar.
The culture of a team is defined horizontally, not vertically, so really important. It's not that if I say, hey, you need more A players, it means all of your employees need to be like you or like your executive team. That would be ridiculous. I like to demand the same level of skill from somebody who's earlier on in their career, or maybe a front line employee that's customer facing, compared to a more seasoned executive would be ridiculous. That is not what I'm saying, and so I think people confuse this.
We want to raise the bar horizontally within each department or function. Let's say that we have customer service, because it's simple and that most people understand. If we have a customer service team and we want to improve the culture, one of the easiest things that you can do is remove the people who suck, because the culture is built from the bottom up, meaning the worst person on the team is what you have signed off on as acceptable. And that becomes your bar. Think about how real that is. And I'll say this as somebody who has a company that has a lot of winners and high performers.
Every time we let go of mediocre people, the team is stoked. They're like, dude, they sucked. Thank God. And I'm glad you saw it. I was going to say something. And the thing is, it's like, I want to beat them to the punch because then they have trust and confidence in our ability to make decisions, right?
If the team feels like you wait forever to let people go, it's very disheartening. Like, there's nothing more demotivating to a winner than being forced to work with a loser. And so if you think about the great teams that exist, you think about like the, you know, the SEAL teams versus, you know, the General Army, there's nothing wrong with being in the General Army, obviously. But special ops and the most elite teams, they get there through elimination. They take it, they take this gigantic amount of people, and then they remove or they deny people. And when people are, you know, they cut them. You have to go through this whole thing, they cut them. Now, we can't have people run through, you know, how, I don't know how many weeks, you know, bootcamp is whatever, but like, however many weeks it is, I can't run someone through that, right? And then find out. Now, you can make the argument that the first 90 days of onboarding can function that way, which I think is a good way to think about it. But we have to be willing to make cuts. And so it's like we need to lubricate within the organization, the ability for managers and leaders to let go of mediocre people. Because the thing is, is you're never actually suffering from losers. Because you're like the true losers, you'll get out because they're so painful. I mean, some of you guys don't, but I would say the decent business owners will at least get the losers out. The people who are limiting your business though, are the mediocre middle that are clogging all the pipes by best being slow, having mediocre work that has to get re-worked by somebody who's a winner and who actually cares. And it's the clock in, clock out behavior that is what creates mediocre organizations. And to be fair, that's the vast majority of organizations. And right now, there's probably people in your business that are thinking like, just blahs, just NPCs, they're just there.