In today’s post, Paul Azad, the founder of ServiceTree talks about team culture, and how your team culture is just as important in an organization as your IP.
When we talk about team culture, it’s really a warm and fuzzy word. And it’s something that a lot of people struggle to put words to what it is.
I’m really fortunate I get to speak to many MSPs, across the world. It’s interesting how sometimes culture comes into the conversation, and it’s coming out while we’re talking about a software application or how they do things. I started to notice a really interesting trend, ad it’s how different size MSPs define culture differently.
Why the smaller MSPs don’t want to do things that impact their team
What I’m actually starting to notice is that the smaller MSPs, I’m talking about up to sort of maybe 8,10 technicians, they don’t want to do things that impact their team, because they feel that they don’t want their team to be upset with change. As an MSP or any organization grows and gets bigger, you’re able to do that if you’ve got structure involved, and you’ve got processes involved. And as an organization, you’ve got a framework on how you do it. Unfortunately, a lot of people don’t like structure, and especially if the organization that you’re working for, when you start doesn’t have structure and rigidity or process, when that starts to come into play, people don’t generally like it. What I actually find really interesting is that the smaller MSPs, the way they defined that don’t want to rock the boat, and they don’t want to have their people unexpectedly experiencing differences to what they have previously.
Three groups of MSPs
On the other hand, a medium-sized MSP and a sort of a larger MSP think differently. I’m able to sort of group it into three groups.
- Small MSP:
They’re normally the kind of MSP that lets a tech do what they want when they want. And the reason why they struggle to change things is because they really have brought that upon themselves. And we’re not talking from a ticketing side or from a PSA side. They really want the tech to pick what ticks they want to work on, and they believe that they can do that. And they’re able to deliver good service. What’s interesting about that is that’s their culture, they want their people to be happy and friendly, and they want their people not to leave.
What does that mean? It delivers inconsistency to our customers. Everyone they generally hire will be like a tier-one or level-one to level-three tech because they want everybody to be able to do any kind of ticket and that’s the way they do things. And unfortunately, what does that mean, it also impacts their gross margins, generally, we find that their gross margins are under the industry standard. And in some cases, there’s no margin or profit there for them to do anything.
The other part of it is, because of all these, that join that kind of organization that they don’t look at their data, and if they do, it’s not going to be any more frequent than once a month. It’s not important to them, and they believe that the team, is more important than they keep them happy, which I definitely agree, it is very important to have your team happy because no team means no business in any service industry.
On this kind of MSP, generally, the real utilization is under 55%.
- Medium MSP:
The second kind of MSP with maybe 10 to 20 or 10 to 30 technicians and their culture is that they want their people to have fun, and they want them to work through their peering or their tickets, so that way, the team within their organization is not very structured. Their team is generally gonna find tickets, and if they can’t work through them, they will work with their peers to work through them. And that’s the culture that they do is have people have fun. We normally say that those ones generally will have some tier one, and the other ones are tier two or three; it might not be really well structured, but the techs still pick the tickets they want to do. And their tier one technicians pick the ticket, sometimes they will become a tier two ticket or a higher ticket, and they just progress through it with no guidance. The key to that organization is it’s all about their culture, about their people having fun.
The other interesting thing with this organization’s size is the utilization of their team is generally going to be not that great, it’s going to be around that 55 to 65%. And what I mean by real, I mean if they’re actually calculated properly, not using the metrics that they generally do, which is exaggerated and not clear.
- Larger MSP:
They start at 25 and above technicians, and their culture is very different. Their culture is team development structure through growth, structure your people to grow, be there for your people to grow, and nurture with them.
What’s really interesting about these organizations, is that everybody feels that they want their team to have fun, but the larger MSPs, and generally the more mature MSPs, do this through the growth of their team. Their team is very aware that the organization is there for them to win together. That way the team is winning by growing and being more mature, and their technological experience is going to grow.
Now, these organizations are generally going to be the ones that will have different people answering the phone. So it could be just a customer service rep or tier one technician answering the phone, they work on the basic tickets, and then the tickets will get escalated to a tier two or tier three team as they require. Their tier two and tier three teams are generally smaller because they’re able to improve their processes, and they’re able to do more at the tier one or tier two level. This got an organization where most of their work is dispatched by a dispatcher, that’s a big element of how they do it.
The second group, generally the smaller with 10 to 20 techs, sometimes does have dispatches, but it’s just part of what they do, they will normally have a service manager overseeing their day-to-day ticket flow and their customer satisfaction. Their culture is more around, we need to do right for our customers because if our customers are happy, we’re happy.
That’s why it is really interesting how the sizes of MSPs definitely have very different versions of their own culture. When I speak to MSPs, culture comes up quite often in the conversation. And, for many years, I scratched my head and said, culture is such a warm and fuzzy thing. It’s something that’s not tangible. How do people articulate what it means to them?
It’s actually like something else I believe is just as vague, and that’s its value. We talk about adding value to your customers, is that value valuable enough? And in my view value is it’s a really simple formula, value is experience, divided by cost. For example, the experience could be something tangible-intangible and the cost could be something money, or it could be time.
An example of this is a kid that’s just out of college and has bought himself a $5,000 Dodge, just a very cheap car. The value to him of that car is just as valuable as maybe a successful business person that’s bought themselves a Lamborghini or Ferrari. For the student, for example, the value proposition is the experience is he’s got freedom, he doesn’t have to wait for his parents to drive him around, and he doesn’t worry about getting a ride on Uber, at the cost of $5,000. The value is quite high.
The same example would be somebody that’s bought themselves a Lamborghini or Ferrari jelly. For those kinds of people, it’s a status thing. It’s something that they’ve strived to do, and driving a car like that gives them that personal satisfaction that they’ve achieved things. So for them spending a couple of $100,000 on a car, that’s the cost; the experience is the position, that branding of themselves, a brand of success is just as valuable to them.
And the same thing with value can be used in, as I mentioned, things that are not around money. Is it worth it? What’s the value in me walking up the street? Or what’s the value of me driving up the street? The consumable there is time, the experience is in the car, I’m going to get there quicker, if it’s a hot day, I won’t be sweaty. The value to me is that where somebody else will say, no, you know what? I’d rather walk in 15 minutes, I might get sweaty, or it might be raining, but the experience to be is my health.
That’s another one of those intangible things that took me quite a long while to be able to describe it. And I’ve got two kids and from an early age, they’re not even teenagers yet but it’s something that I quite often will remind them, what’s the value of that? What’s the value of us buying that thing? Or what’s the value of me doing this? And, it’s really a nice way to be able to say – Listen, I’m not saying it’s not worth that money, but if you’re able to make it into something that’s tangible is that value or not? – It’s a nicer way to have that conversation.
The different sizes of MSPs
Back to college, or back to those three different size MSPs. Some of the other interesting points about those different types of MSPs are the smaller ones, which, in all honesty, a lot of small MSPs are going to stay small, because they are not ready to make the decision to invest in the business.
I speak to MSPs that are 5, 6, 7, even three or four techs, and they’ve been locked up for 15, 20, in one case, 34 years. Now, when they say they’re growing, immediately I think: yeah, no, you’re not, because you haven’t done the things that you need to do.
For the smaller MSPs, I’m talking about 1 to 10 techs again, their ratio of the devices to technicians is less than 100 normally, maybe 120. How much they’re paying per hour for a team is generally over a higher rate, because everybody’s at level one, level two, or level three thing. But to them, the culture is they want their people to do what they want to do, they don’t want to restrict their people from doing what they’re doing.
The second tier, the more mature ones, as I mentioned, their utilization, sort of 35 to 65%. Their ratio of devices to techs is normally around 120 to 150, and that’s a reasonable thing. As an MSP, you can be quite profitable in those numbers.
And the third one is the larger MSPs. Now, in those larger MSPs, they generally have a device-to-technician ratio, generally over 150, I’ve seen 180, and I’ve seen up to the 200 mark. So it’s definitely possible. And for them, it’s all around that growth of their people.
Another thing about the three different size MSPs is that the first one, the smaller one, lets your people do what they want, and yes, the people are happy, but you’re not delivering a consistent product to your customers. The second type, certainly consistency is better, because you generally have somebody overseeing the tickets or the business, and the data is generally looked at on a weekly or fortnightly basis. This means you’re getting some consistency in what you’re trying to achieve. Where the more mature, the larger MSPs, they’re very consistent and those are the guys that look at data every day, even maybe hourly or every couple hours to see it. What that means is the delivery of the service that we deliver to our customers is quite different.
We can use another way to describe these three different kinds of MSPs. I’m somebody that always has a reference point of something that’s not technology or business because not everybody is able to articulate or understand it. And not because people are not smart or dumb, it’s because in business, sometimes it’s not the most tangible conversation we have.
Going to a restaurant
When I talk about this example, it’s like going to a restaurant.
In the smaller one, somebody at the counter greets you, and they take you to the table. Another time you go there, they don’t, it’s up to you to find it, and then you’ll get somebody waving you in and saying yes, go grab a seat. When we look at the menu, the pages of the menu are just clipped together. Sometimes you have to put your hand up to get service, other times they’ll come to you; sometimes you have to make a booking to go there, other times you don’t; sometimes your meals are out fast and they’re hot, other times you look around, and other guests are getting like the royal service, the royal treatment, and you feel like what’s happened to me? It’s also that consistency. In that example, you’re putting your head up for attention, and maybe because you don’t have the big table, a lot of money is being spent. That’s generally what you’ll find with these small MSPs. And you got to remember that in everything you do as a business, you’ve got to feel what it would be like to be on the other side of the table on the chair, experiencing this from another angle.
The middle-sized MSP, in the example of the restaurant, it’s one where you go to the restaurant, and you’re now always greeted at the door by someone. But sometimes you can choose where you want to sit other times, they’ll tell you that there’s a table here, that’s where you’re going down; sometimes they’ll offer you water, and the menu as soon as you sit down, other times the person that greets you at the door is the person that is the one that takes you to the table and gives you the menu; but other times it might be that they just take you to the table walk away and somebody else does it. Because it’s maybe a quieter time of day, the person that’s at the door is also going to be like a part-time waitress. So sometimes you feel that you’re really looked after, other times you feel like your business or your patronage at that restaurant, isn’t that important to them today.
The third one is when we go to a restaurant, and we’re greeted at the counter at the front door every time. You’re always taken to your seat, and they ask you for your preference, whether would you like to be either in the bar or in a booth; when you sit down, they always ask if you’d like water and give you the menu; then somebody else will come out here and go through the menu with you. The server that comes in and handles the handover from the person that greets you, looks after you all the way through to the end until you leave. The meals are always very similar, you always feel the same value. It’s a very consistent experience.
What most people don’t realize is that consistency of experience doesn’t come through accidentally, it’s a lot of work to do to get there. And it all comes back down to the structure, the organization, the maturity of the organization, and how well they put processes in to manage it. And then, unfortunately, or fortunately, it’s the culture of the organization that is the gel that sticks out all together.
You can’t expect a better small MSP if you’re not delivering consistency, if you’re expecting your team to be part of the organization because your culture is to have fun, that people do what they want to do, you don’t want to restrict them. You can’t actually use that level of culture to grow through the maturity of a business.